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The Cotton Club Letter - For Week Ending 10/23/2015 | SterlingTerrell.net

The Cotton Club Letter - For Week Ending 10/23/2015




Price Picture


Chart Source: barchart.com



Trend Picture


Chart Source: barchart.com


Notes
Nearby contract closed around 109 points lower this week.
Managed money is net long.
Short-term, technical traders see possible support around 62.00, possible resistance around 65.00.
The trend is down.

Price
Dec-15 is at:62 .76        Volume = 10,029
March-16 is at:  62.60   Volume = 4,764
May-16 is at: 63.11       Volume = 974
Cotlook 'A' Index is at: 70.85

Cash Sales
Most recently, on 509 bales traded, the trading platform TheSeam.com reported an average cash price of approximately: 55.10.
On Dec, that puts the average basis at approximately: -766 points.
Cash prices are averaging approximately 11.25 cents over loan value.

Stocks and Sales
ICE Certified Cotton Stocks = 43,749       
US Net Upland Export Sales (2015/2016) = 96,900
(Mexico was the big buyer at 24,900.)

Current World Balance Sheet (2015/2016)
Beginning Stocks: 111.79 (million 480 lb. bales)
Production: 107.38
Supply: 219.17
Mill Use: 112.27
Ending Stocks: 106.97
Ending Stocks/Mill Use Ratio: 95.3%

Current China Balance Sheet (
2015/2016)
Beginning Stocks: 67.92 (million 480 lb. bales)
Production: 25.30
Imports - Exports: 5.55
Supply: 98.77
Mill Use: 34.00
Ending Stocks: 65.27
Ending Stocks/Mill Use Ratio: 193.2%

Current India Balance Sheet (
2015/2016)
Beginning Stocks: 13.39 (million 480 lb. bales)
Production: 29.00
Imports - Exports: -3.40
Supply: 38.99
Mill Use: 25.50
Ending Stocks: 13.49
Ending Stocks/Mill Use Ratio: 52.9%

Current USA Balance Sheet (2015/2016)
Beginning Stocks: 3.7 (million 480 lb. bales)
Production: 13.34
Imports - Exports: -10.19
Supply: 6.85
Mill Use: 3.70
Ending Stocks: 3.1
Ending Stocks/Mill Use Ratio: 83.8%

Commitments of Traders
Producer / Merchant
  • Long:  17,909  (Contracts)
  • Short: 125,428
Swap Dealers
  • Long: 62,261
  • Short:  6,222
Managed Money
  • Long:  60,645
  • Short: 11,880
Other Reportables
  • Long: 18,200
  • Short: 15,091

Oct. Cotton Price Model: 58.3 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: 58.3 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.



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