Price Picture
Chart Source: Barchart.com
Trend Picture
Chart Source: Barchart.com
Notes
Nearby contract closed 105 points higher this week.
Managed money is net long.
Short-term, technical traders see possible support around 61.20, possible resistance around 62.20.
The trend is down.
Price
July-16 is at: 61.67 Volume = 12,731
July-16 is at: 61.67 Volume = 12,731
Dec-16 is at: 61.33 Volume = 3,751
Mar-17 is at: 61.60 Volume =17
Mar-17 is at: 61.60 Volume =17
Cotlook ‘A’ Index is at: 70.20
Cash Sales
Recently, on 1,658 bales traded, the trading platform TheSeam.com reported an average cash price of approximately: 55.83.
On the nearby contract, that puts the average basis at approximately: -584 points.
Cash prices are averaging approximately 7.80 cents over loan value.
Stocks and Sales
ICE Certified Cotton Stocks = 89,050
US Net Upland Export Sales (2015/2016) = 189,400
Vietnam was the big buyer at 58,700.
Beginning Stocks: 102.84 (million 480 lb. bales)
Production: 104.36
Supply: 207.2
Mill Use: 110.78
Ending Stocks: 96.48
Ending Stocks/Mill Use Ratio: 87.1%
Current China Balance Sheet (2015/2016)
Beginning Stocks: 63.32 (million 480 lb. bales)
Production: 22.50
Imports – Exports: 4.4
Supply: 90.22
Mill Use: 33.50
Ending Stocks: 57.72
Ending Stocks/Mill Use Ratio: 172.3%
Current India Balance Sheet (2015/2016)
Beginning Stocks: 10.89 (million 480 lb. bales)
Production: 28.00
Imports – Exports: -3.10
Supply: 35.79
Mill Use: 24.50
Ending Stocks: 11.29
Ending Stocks/Mill Use Ratio: 46.1%
Current USA Balance Sheet (2015/2016)
Beginning Stocks: 4.0 (million 480 lb. bales)
Production: 14.80
Imports – Exports: -10.49
Supply: 8.31
Mill Use: 3.60
Ending Stocks: 4.70
Ending Stocks/Mill Use Ratio: 130.6%
Producer / Merchant
Long: 15,365 (Contracts)
Short: 107,227
Swap Dealers
Long: 65,320
Short: 6,803
Managed Money
Long: 51,321
Short: 25,945
Other Reportables
Long: 21,852
Short: 18,546
Cotton Club Letter Price Model: 52.6 cents
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
Bearish.
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 5/20/2016“
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There is substantial risk of loss to futures and options trading.
Past performance may not be indicative of future results.
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