Notes
Nearby contract closed approximately 229 points lower this week.
Managed money is net long.
Short-term, technical traders see possible support around 68.00, possible resistance around 69.50.
The trend is up.
Price
Mar-17 is at: 69.10 Volume = 9,119
May-17 is at: 69.68 Volume = 1,203
Cotlook ‘A’ Index is at: 77.50
Cash Sales
Recently, on 4,809 bales traded, the trading platform TheSeam.com reported an average cash price of approximately: 67.68.
On the nearby contract, that puts the average basis at approximately: –85 points.
Cash prices are averaging approximately 13.43 cents over loan value.
Stocks and Sales
ICE Certified Cotton Stocks = 39,557
US Net Upland Export Sales (2016/2017) = 160,400
China was the big buyer at 29,800.
Current World Balance Sheet (2016/2017)
Beginning Stocks: 96.60 (million 480 lb. bales)
Production: 102.69
Supply: 199.29
Mill Use: 112.03
Ending Stocks: 87.35
Ending Stocks/Mill Use Ratio: 77.9%
Current China Balance Sheet (2016/2017)
Beginning Stocks: 58.20 (million 480 lb. bales)
Production: 21.00
Imports – Exports: 4.4
Supply: 83.60
Mill Use: 35.50
Ending Stocks: 48.10
Ending Stocks/Mill Use Ratio: 135.5%
Current India Balance Sheet (2016/2017)
Beginning Stocks: 10.94 (million 480 lb. bales)
Production: 26.50
Imports – Exports: –2.4
Supply: 35.04
Mill Use: 24.00
Ending Stocks: 11.04
Ending Stocks/Mill Use Ratio: 46.0%
Current USA Balance Sheet (2016/2017)
Beginning Stocks: 3.8 (million 480 lb. bales)
Production: 16.03
Imports – Exports: -11.99
Supply: 7.84
Mill Use: 3.50
Ending Stocks: 4.30
Ending Stocks/Mill Use Ratio: 122.9%
Swap Dealers
Cotton Club Letter Price Model: Current Price Is 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.
Click Here to Read: “10 Points on the ICE Cotton #2 Chart(CT) – Week Ending 11/4/2016“
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The Cotton Club Letter Archive can be found by clicking, here
