The Cotton Club Letter - For Week Ending 2/26/2016 | SterlingTerrell.net

The Cotton Club Letter - For Week Ending 2/26/2016


Price Picture

Chart Source: Barchart.com

Trend Picture

Chart Source: Barchart.com

Nearby contract closed 201 points lower this week.
Managed money is net short.
Short-term, technical traders see possible support around 57.00, possible resistance around 59.00.
The trend is down.

May-16 is at:  57.53        Volume = 12,114
July-16 is at:  57.33         Volume = 2,999
Dec-16 is at:   57.09        Volume = 2,203
Cotlook 'A' Index is at: 65.50

Cash Sales
Most recently, on 1,820 bales traded, the trading platform TheSeam.com reported an average cash price of approximately: 49.68.
On May, that puts the average basis at approximately: -785 points.
Cash prices are averaging approximately 6.83 cents over loan value.

Stocks and Sales
ICE Certified Cotton Stocks = 66,104  
US Net Upland Export Sales (2015/2016) = 110,600
(China was the big buyer at 21,200.)

Current World Balance Sheet (2015/2016)
Beginning Stocks: 112.17 (million 480 lb. bales)
Production: 101.38
Supply: 213.55
Mill Use: 110.60
Ending Stocks: 104.08
Ending Stocks/Mill Use Ratio: 94.1%

Current China Balance Sheet (2015/2016)
Beginning Stocks: 67.92 (million 480 lb. bales)
Production: 23.80
Imports - Exports: 4.8
Supply: 96.52
Mill Use: 32.00
Ending Stocks: 64.52
Ending Stocks/Mill Use Ratio: 201.6%

Current India Balance Sheet (2015/2016)

Beginning Stocks: 13.49 (million 480 lb. bales)
Production: 27.80
Imports - Exports: -4.8
Supply: 36.49
Mill Use: 24.50
Ending Stocks: 11.99
Ending Stocks/Mill Use Ratio: 48.9%

Current USA Balance Sheet (2015/2016)
Beginning Stocks: 3.7 (million 480 lb. bales)
Production: 12.94
Imports - Exports: -9.49
Supply: 7.15
Mill Use: 3.60
Ending Stocks: 3.60
Ending Stocks/Mill Use Ratio: 100.0%

Commitments of Traders
Producer / Merchant
    Long:  30,075  (Contracts)
    Short: 67,108

Swap Dealers
    Long: 53,921
    Short:  5,185

Managed Money
    Long:  47,127
    Short: 51,959

Other Reportables
    Long: 24,283
    Short: 25,522

Dec. Cotton Price Model: 54.9 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
Keep in mind that while this is a weekly letter, I can easily change my mind in 24 hours.

Click Here to Read: "10 Points on the ICE Cotton #2 Chart (CT) - Week Ending 2/26/2016"


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There is substantial risk of loss to futures and options trading.
Past performance may not be indicative of future results.
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