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The Cotton Club Letter - For Week Ending 12/18/2015 | SterlingTerrell.net

The Cotton Club Letter - For Week Ending 12/18/2015



Price Picture


Chart Source: barchart.com



Trend Picture

Chart Source: barchart.com


Notes
Nearby contract closed around 8 points lower this week.
Managed money is net long.
Short-term, technical traders see possible support around 63.00, possible resistance around 65.00.
The trend is down.

Price
March-16 is at:  63.69     Volume = 13,392
May-16 is at:  64.46        Volume = 2,148
July-16 is at:  65.09          Volume = 692
Cotlook 'A' Index is at: 69.90

Cash Sales
Most recently, on 20,249 bales traded, the trading platform TheSeam.com reported an average cash price of approximately: 59.21.
On March, that puts the average basis at approximately: -448 points.
Cash prices are averaging approximately 10.73 cents over loan value.

Stocks and Sales
ICE Certified Cotton Stocks = 65,239      
US Net Upland Export Sales (2015/2016) = 99,500
(Vietnam was the big buyer at 47,500.)

Current World Balance Sheet (2015/2016)
Beginning Stocks: 112.01 (million 480 lb. bales)
Production: 103.71
Supply: 215.72
Mill Use: 111.39
Ending Stocks: 104.39
Ending Stocks/Mill Use Ratio: 93.7%

Current China Balance Sheet (
2015/2016)
Beginning Stocks: 67.92 (million 480 lb. bales)
Production: 24.30
Imports - Exports: 5.3
Supply: 97.52
Mill Use: 32.50
Ending Stocks: 65.02
Ending Stocks/Mill Use Ratio: 200.1%

Current India Balance Sheet (
2015/2016)
Beginning Stocks: 13.49 (million 480 lb. bales)
Production: 28.50
Imports - Exports: -4.3
Supply: 37.69
Mill Use: 25.30
Ending Stocks: 12.39
Ending Stocks/Mill Use Ratio: 49.0%

Current USA Balance Sheet (2015/2016)
Beginning Stocks: 3.7 (million 480 lb. bales)
Production: 13.03
Imports - Exports: -9.99
Supply: 6.74
Mill Use: 3.70
Ending Stocks: 3.00
Ending Stocks/Mill Use Ratio: 81.1%

Commitments of Traders
Producer / Merchant
  • Long:  12,043  (Contracts)
  • Short: 135,482
Swap Dealers
  • Long: 58,210
  • Short:  9,266
Managed Money
  • Long:  70,528
  • Short: 10,191
Other Reportables
  • Long: 23,954
  • Short: 13,323

Dec. Cotton Price Model: 55.4 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: 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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