Price Picture
Chart Source: Barchart.com
Trend Picture
Chart Source: Barchart.com
Notes
Nearby contract closed 305 points higher this week.
Managed money is net long.
Short-term, technical traders see possible support around 60.00, possible resistance around 64.00.
The trend is up.
May-16 is at: 63.08 Volume = 3,845
July-16 is at: 63.69 Volume = 19,889
Dec-16 is at: 62.52 Volume = 7,462
Cotlook ‘A’ Index is at:71.65
Cash Sales
Recently, on 1,306 bales traded, the trading platform TheSeam.com reported an average cash price of approximately: 53.86.
On the nearby contract, that puts the average basis at approximately: -922 points.
Cash prices are averaging approximately 5.97 cents over loan value.
Stocks and Sales
ICE Certified Cotton Stocks = 44,904
US Net Upland Export Sales (2015/2016) = 104,800
China was the big buyer at 20,800.
Beginning Stocks: 111.88 (million 480 lb. bales)
Production: 99.80
Supply: 211.68
Mill Use: 109.59
Ending Stocks: 102.22
Ending Stocks/Mill Use Ratio: 93.3%
Current China Balance Sheet (2015/2016)
Beginning Stocks: 67.92 (million 480 lb. bales)
Production: 23.80
Imports – Exports: 4.8
Supply: 96.52
Mill Use: 32.50
Ending Stocks: 64.02
Ending Stocks/Mill Use Ratio: 197.0%
Current India Balance Sheet (2015/2016)
Beginning Stocks: 13.49 (million 480 lb. bales)
Production: 26.80
Imports – Exports: -4.95
Supply: 35.34
Mill Use: 24.50
Ending Stocks: 10.84
Ending Stocks/Mill Use Ratio: 44.2%
Current USA Balance Sheet (2015/2016)
Beginning Stocks: 3.7 (million 480 lb. bales)
Production: 12.87
Imports – Exports: -9.46
Supply: 7.11
Mill Use: 3.60
Ending Stocks: 3.50
Ending Stocks/Mill Use Ratio: 97.2%
Producer / Merchant
Long: 16,655 (Contracts)
Short: 103,087
Swap Dealers
Long: 70,836
Short: 7,239
Managed Money
Long: 50,690
Short: 32,063
Other Reportables
Long: 19,497
Short: 17,890
Cotton Club Letter Price Model: 54.4 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
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 4/22/2016“
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There is substantial risk of loss to futures and options trading.
Past performance may not be indicative of future results.
One should carefully consider their financial suitability prior to trading futures or options.
