The Cotton Club Letter - For Week Ending 1/20/2017 | SterlingTerrell.net

The Cotton Club Letter - For Week Ending 1/20/2017

  Price Picture
Chart Source: Barchart.com

Trend Picture
Chart Source: Barchart.com

Nearby contract closed approximately 77 points higher
this week.

Managed money is net long.
Short-term, technical traders see possible support around 72
.00, possible resistance around 73.30.
The trend is up.

Mar-17 is at:   73.04        Volume = 12,411
May-17 is at:  73.26         Volume = 6,146
July-17 is at:   75.25         Volume = 1,587
Cotlook 'A' Index is at: 81.50

Cash Sales

Recently, on 15,943 bales traded, the trading platform TheSeam.com reported an average cash price of approximately: 68.41.
On the nearby contract, that puts the average basis at approximately-463 points.
Cash prices are averaging approximately 14.40 cents over loan value.

Stocks and Sales
ICE Certified Cotton Stocks = 117
US Net Upland Export Sales (2016/2017) = 346,500
     Vietnam was the big buyer at 67,700. 

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:  16,568  (Contracts)
    Short: 183,700
Swap Dealers
    Long:  58,698
    Short:  13,572
Managed Money
    Long:  96,416
    Short:  12,124
Other Reportables
    Long:  38,330
    Short:  10,691

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
Keep in mind that while this is a weekly letter, I can easily change my mind in 24 hours.


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