The Cotton Club Letter - For Week Ending 10/9/2015 | SterlingTerrell.net

The Cotton Club Letter - For Week Ending 10/9/2015

Price Picture

Chart Source: barchart.com

Trend Picture

Chart Source: barchart.com

Nearby contract closed around 150 points higher this week.
Managed money is net long.
Short-term, technical traders see possible support around 60.00, possible resistance around 62.00.
The trend is down.

Dec-15 is at: 61.61        Volume = 19,824
March-16 is at:  61.53   Volume = 7,144
May-16 is at: 62.10       Volume = 690
Cotlook 'A' Index is at: 68.60

Cash Sales
Most recently, on 409 bales traded, the trading platform TheSeam.com reported an average cash price of approximately: 56.83.
On Dec, that puts the average basis at approximately: -478 points.
Cash prices are averaging approximately 10.90 cents over loan value.

Stocks and Sales
ICE Certified Cotton Stocks = 43,078       
US Net Upland Export Sales (2015/2016) = 206,900
(Mexico was the big buyer at 128,100.)

Current World Balance Sheet (2015/2016)
Beginning Stocks: 110.91 (million 480 lb. bales)
Production: 108.74
Supply: 219.65
Mill Use: 113.44
Ending Stocks: 106.26
Ending Stocks/Mill Use Ratio: 93.7%

Current China Balance Sheet (
Beginning Stocks: 66.92 (million 480 lb. bales)
Production: 26.00
Imports - Exports: 5.70
Supply: 98.62
Mill Use: 34.00
Ending Stocks: 64.62
Ending Stocks/Mill Use Ratio: 190.1%

Current India Balance Sheet (
Beginning Stocks: 13.57 (million 480 lb. bales)
Production: 29.00
Imports - Exports: -3.95
Supply: 38.62
Mill Use: 26.00
Ending Stocks: 12.92
Ending Stocks/Mill Use Ratio: 49.7%

Current USA Balance Sheet (2015/2016)
Beginning Stocks: 3.7 (million 480 lb. bales)
Production: 13.43
Imports - Exports: -10.19
Supply: 6.94
Mill Use: 3.70
Ending Stocks: 3.2
Ending Stocks/Mill Use Ratio: 86.48%

Commitments of Traders
Producer / Merchant
  • Long:  21,202  (Contracts)
  • Short: 111,573
Swap Dealers
  • Long: 64,535
  • Short:  5,906
Managed Money
  • Long:  51,576
  • Short: 25,979
Other Reportables
  • Long: 18,643
  • Short: 9,949

June Cotton Price Model: 60.1 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: 60.1 cents."

(*Note: This model does not attempt to forecast the future direction or level of cotton prices.)

General View
(Keep in mind that while this is a weekly letter, I can easily change my mind in 24 hours.)


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*This is for informational purposes only, and not a recommendation to buy or sell.
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.