Notes
Nearby contract closed approximately 234 points lower this week.
Managed money is net long.
Short-term, technical traders see possible support around 72.00, possible resistance around 76.00.
The trend is up.
Price
Mar-17 is at: 73.48 Volume = 14,854
May-17 is at: 75.52 Volume = 28,200
July-17 is at: 76.47 Volume = 9,807
Cotlook ‘A’ Index is at: 85.80
Cash Sales
Recently, on 12,346 bales traded, the trading platform TheSeam.com reported an average cash price of approximately: 72.22.
On the nearby contract, that puts the average basis at approximately: -126 points.
Cash prices are averaging approximately 18.94 cents over loan value.
Stocks and Sales
ICE Certified Cotton Stocks = 306,725
US Net Upland Export Sales (2016/2017) = 222,200
Turkey was the big buyer at 89,500.
Current World Balance Sheet (2016/2017)
Beginning Stocks: 96.83 (million 480 lb. bales)
Production: 105.42
Mill Use: 112.52
Ending Stocks: 89.90
Ending Stocks/Mill Use Ratio: 79.9%
Current China Balance Sheet (2016/2017)
Beginning Stocks: 58.20 (million 480 lb. bales)
Production: 22.00
Mill Use: 36.25
Ending Stocks: 48.85
Ending Stocks/Mill Use Ratio: 134.8%
Current India Balance Sheet (2016/2017)
Beginning Stocks: 10.94 (million 480 lb. bales)
Production: 27.00
Mill Use: 23.75
Ending Stocks: 11.59
Ending Stocks/Mill Use Ratio: 48.8%
Current USA Balance Sheet (2016/2017)
Beginning Stocks: 3.8 (million 480 lb. bales)
Production: 16.96
Mill Use: 3.30
Ending Stocks: 4.80
Ending Stocks/Mill Use Ratio: 145.5%
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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