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The Cotton Club Letter - For Week Ending 2/3/2017 | SterlingTerrell.net

The Cotton Club Letter - For Week Ending 2/3/2017



  Price Picture
Chart Source: Barchart.com


Trend Picture
Chart Source: Barchart.com


Notes
Nearby contract closed approximately 156 points higher
this week.

Managed money is net long.
Short-term, technical traders see possible support around 76
.20, possible resistance around 77.00.
The trend is up.

Price
Mar-17 is at:   76.41        Volume = 20,700
May-17 is at:  77.07         Volume = 14,293
July-17 is at:   77.77         Volume = 5,629
Cotlook 'A' Index is at: 85.75

Cash Sales

Recently, on 3,797 bales traded, the trading platform TheSeam.com reported an average cash price of approximately: 71.40.
On the nearby contract, that puts the average basis at approximately-501 points.
Cash prices are averaging approximately 18.38 cents over loan value.

Stocks and Sales
ICE Certified Cotton Stocks = 205
,230
US Net Upland Export Sales (2016/2017) = 328,700
     India was the big buyer at 52,500. 

Current World Balance Sheet (2016/2017)
Beginning Stocks: 96.89 (million 480 lb. bales)
Production: 105.34
Mill Use: 111.76
Ending Stocks: 90.65
Ending Stocks/Mill Use Ratio: 81.1


Current China Balance Sheet (2016/2017)
Beginning Stocks: 58.20 (million 480 lb. bales)
Production: 22.00
Mill Use: 36.25
Ending Stocks: 48.35
Ending Stocks/Mill Use Ratio: 133.4%

Current India Balance Sheet (2016/2017)

Beginning Stocks: 10.94 (million 480 lb. bales)
Production: 27.00
Mill Use: 23.25
Ending Stocks: 12.09
Ending Stocks/Mill Use Ratio: 52.0%

Current USA Balance Sheet (2016/2017)
Beginning Stocks: 3.8 (million 480 lb. bales)
Production: 16.96
Mill Use: 3.30
Ending Stocks: 5.00
Ending Stocks/Mill Use Ratio: 151.5%

Producer / Merchant
    Long:  21,354  (Contracts)
    Short: 199,689
Swap Dealers
    Long:  60,836
    Short:  4,408
Managed Money
    Long:  105,881
    Short:  11,740
Other Reportables
    Long:  31,635
    Short:  14,345

Cotton Club Letter Price Model:  Current Price Is Available By Subscription Only
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
Bullish.
Keep in mind that while this is a weekly letter, I can easily change my mind in 24 hours.


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