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The Cotton Club Letter - For Week Ending 11/27/2015 | SterlingTerrell.net

The Cotton Club Letter - For Week Ending 11/27/2015



Price Picture


Chart Source: barchart.com



Trend Picture

Chart Source: barchart.com


Notes
Nearby contract closed around 110 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 down.

Price
March-16 is at:  63.93     Volume = 15,687
May-16 is at:  64.56        Volume = 1,711
July-16 is at:  64.89          Volume = 823
 
Cotlook 'A' Index is at: 69.80

Cash Sales
Most recently, on 10,323 bales traded, the trading platform TheSeam.com reported an average cash price of approximately: 59.09.
On March, that puts the average basis at approximately: -484 points.
Cash prices are averaging approximately 11.40 cents over loan value.

Stocks and Sales
ICE Certified Cotton Stocks = 63,958      
US Net Upland Export Sales (2015/2016) = 267,600
(Vietnam was the big buyer at 92,100.)

Current World Balance Sheet (2015/2016)
Beginning Stocks: 111.94 (million 480 lb. bales)
Production: 105.63
Supply: 217.57
Mill Use: 111.59
Ending Stocks: 106.09
Ending Stocks/Mill Use Ratio: 95.1%

Current China Balance Sheet (
2015/2016)
Beginning Stocks: 67.92 (million 480 lb. bales)
Production: 25.00
Imports - Exports: 5.55
Supply: 98.47
Mill Use: 33.00
Ending Stocks: 65.47
Ending Stocks/Mill Use Ratio: 198.4%

Current India Balance Sheet (
2015/2016)
Beginning Stocks: 13.39 (million 480 lb. bales)
Production: 28.50
Imports - Exports: -3.40
Supply: 38.49
Mill Use: 25.50
Ending Stocks: 12.99
Ending Stocks/Mill Use Ratio: 50.9%

Current USA Balance Sheet (2015/2016)
Beginning Stocks: 3.7 (million 480 lb. bales)
Production: 13.28
Imports - Exports: -10.19
Supply: 6.79
Mill Use: 3.70
Ending Stocks: 3.1
Ending Stocks/Mill Use Ratio: 83.8%

Commitments of Traders
Producer / Merchant
  • Long:  15,676  (Contracts)
  • Short: 118,644
Swap Dealers
  • Long: 60,932
  • Short:  3,152
Managed Money
  • Long:  52,939
  • Short: 16,099
Other Reportables
  • Long: 19,421
  • Short: 12,909

Nov. Cotton Price Model: 56.3 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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