Notes
Nearby contract closed approximately 100 points lower this week.
Managed money is net long.
Short-term, technical traders see possible support around 77.00, possible resistance around 78.60.
The trend is up.
Price
May-17 is at: 77.29 Volume = 11,248
July-17 is at: 78.37 Volume = 6,421
Dec-17 is at: 75.29 Volume = 3,594
Cotlook ‘A’ Index is at: 87.10
Cash Sales
Recently, on 4,521 bales traded, the trading platform TheSeam.com reported an average cash price of approximately: 71.50.
On the nearby contract, that puts the average basis at approximately: –579 points.
Cash prices are averaging approximately 20.66 cents over loan value.
Stocks and Sales
ICE Certified Cotton Stocks = 324,840
US Net Upland Export Sales (2016/2017) = 248,900
Indonesia was the big buyer at 68,400.
Current World Balance Sheet (2016/2017)
Beginning Stocks: 97.09 (million 480 lb. bales)
Production: 105.72
Mill Use: 112.43
Ending Stocks: 90.48
Ending Stocks/Mill Use Ratio: 80.5%
Current China Balance Sheet (2016/2017)
Beginning Stocks: 58.20 (million 480 lb. bales)
Production: 22.00
Mill Use: 36.25
Ending Stocks: 48.90
Ending Stocks/Mill Use Ratio: 134.9%
Current India Balance Sheet (2016/2017)
Beginning Stocks: 10.94 (million 480 lb. bales)
Production: 27.00
Mill Use: 23.75
Ending Stocks: 11.89
Ending Stocks/Mill Use Ratio: 50.1%
Current USA Balance Sheet (2016/2017)
Beginning Stocks: 3.8 (million 480 lb. bales)
Production: 17.23
Mill Use: 3.30
Ending Stocks: 4.50
Ending Stocks/Mill Use Ratio: 136.4%
Swap Dealers
Cotton Club Letter Price Model: Current Price Is Available By Subscription Only
A regression model, like the one located here can give insight into how prices, on average, would react given a change in one or more fundamental supply or demand factors. A proper interpretation of this price model would be:
“Over the last number of years, if cotton supply and demand were at their current levels, we would – on average – expect the US price of cotton to be approximately: X cents.”
*Note – This model does not attempt to forecast the future direction or level of cotton prices.
General View
Bullish.
Keep in mind that while this is a weekly letter, I can easily change my mind in 24 hours.
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