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The Cotton Club Letter - For Week Ending 1/22/2016 | SterlingTerrell.net

The Cotton Club Letter - For Week Ending 1/22/2016



Price Picture

Chart Source: barchart.com



Trend Picture

Chart Source: barchart.com


Notes
Nearby contract closed 104 points higher this week.
Managed money is net long.
Short-term, technical traders see possible support around 61.50, possible resistance around 63.00.
The trend is down.

Price
March-16 is at:  62.45     Volume = 12,090
May-16 is at:  62.83        Volume = 53,695
July-16 is at:  63.30          Volume = 1,467
Cotlook 'A' Index is at: 68.80

Cash Sales
Most recently, on 14,565 bales traded, the trading platform TheSeam.com reported an average cash price of approximately: 57.32.
On March, that puts the average basis at approximately: -513 points.
Cash prices are averaging approximately 10.54 cents over loan value.

Stocks and Sales
ICE Certified Cotton Stocks = 61,303      
US Net Upland Export Sales (2015/2016) = 194,600
(Turkey was the big buyer at 53,800.)

Current World Balance Sheet (2015/2016)
Beginning Stocks: 112.07 (million 480 lb. bales)
Production: 101.56
Supply: 213.63
Mill Use: 110.94
Ending Stocks: 102.86
Ending Stocks/Mill Use Ratio: 92.7%

Current China Balance Sheet (
2015/2016)
Beginning Stocks: 67.92 (million 480 lb. bales)
Production: 23.80
Imports - Exports: 5.3
Supply: 97.02
Mill Use: 32.50
Ending Stocks: 64.52
Ending Stocks/Mill Use Ratio: 198.5%

Current India Balance Sheet (
2015/2016)
Beginning Stocks: 13.49 (million 480 lb. bales)
Production: 28.00
Imports - Exports: -4.8
Supply: 36.69
Mill Use: 25.00
Ending Stocks: 11.69
Ending Stocks/Mill Use Ratio: 46.8%

Current USA Balance Sheet (2015/2016)
Beginning Stocks: 3.7 (million 480 lb. bales)
Production: 12.94
Imports - Exports: -9.99
Supply: 6.5
Mill Use: 3.60
Ending Stocks: 3.10
Ending Stocks/Mill Use Ratio: 86.1%

Commitments of Traders
Producer / Merchant
  • Long:  24,236  (Contracts)
  • Short: 103,032
Swap Dealers
  • Long: 49,746
  • Short:  9,444
Managed Money
  • Long:  49,778
  • Short: 23,233
Other Reportables
  • Long: 28,401
  • Short: 15,687

Dec. 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: X 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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