The Cotton Club Letter - For Week Ending 3/4/2016 | SterlingTerrell.net

The Cotton Club Letter - For Week Ending 3/4/2016


Price Picture

Chart Source: Barchart.com

Trend Picture

Chart Source: Barchart.com

Nearby contract closed 42 points lower this week.
Managed money is net short.
Short-term, technical traders see possible support around 56.00, possible resistance around 58.00.
The trend is down.

May-16 is at:  57.11        Volume = 11,436
July-16 is at:  56.71         Volume = 4,795
Dec-16 is at:   56.45        Volume = 2,065
Cotlook 'A' Index is at: 64.05

Cash Sales
Most recently, on 5,893 bales traded, the trading platform TheSeam.com reported an average cash price of approximately: 50.84.
On May, that puts the average basis at approximately: -627 points.
Cash prices are averaging approximately 7.79 cents over loan value.

Stocks and Sales
ICE Certified Cotton Stocks = 72,178  
US Net Upland Export Sales (2015/2016) = 173,900
    Turkey was the big buyer at 69,100.

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:  34,670  (Contracts)
    Short: 66,657

Swap Dealers
    Long: 57,703
    Short:  6,548

Managed Money
    Long:  48,930
    Short: 54,593

Other Reportables
    Long: 24,201
    Short: 32,710

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 3/4/2016"


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There is substantial risk of loss to futures and options trading.
Past performance may not be indicative of future results.
One should carefully consider their financial suitability prior to trading futures or options.