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The Cotton Club Letter - For Week Ending 2/24/2017 | SterlingTerrell.net

The Cotton Club Letter - For Week Ending 2/24/2017



  Price Picture
Chart Source: Barchart.com


Trend Picture
Chart Source: Barchart.com


Notes
Nearby contract closed approximately 105
points higher this week.
Managed money is net long.
Short-term, technical traders see possible support around 76.20, possible resistance around 76.80.
The trend is up.

Price

May-17 is at:  76.57         Volume = 11,616
July-17 is at:   77.50         Volume = 4,650
Dec-17 is at:   73.98          Volume = 2,252
Cotlook 'A' Index is at: 85.80

Cash Sales

Recently, on 13,818 bales traded, the trading platform TheSeam.com reported an average cash price of approximately: 71.96.
On the nearby contract, that puts the average basis at approximately-461 points.
Cash prices are averaging approximately 18.31 cents over loan value.

Stocks and Sales
ICE Certified Cotton Stocks = 323
,678
US Net Upland Export Sales (2016/2017) = 367,200
     Vietmam was the big buyer at 138,700. 

Current World Balance Sheet (2016/2017)
Beginning Stocks: 96.83 (million 480 lb. bales)
Production: 105.42
Mill Use: 112.52
Ending Stocks: 89.90
Ending Stocks/Mill Use Ratio: 79.9


Current China Balance Sheet (2016/2017)
Beginning Stocks: 58.20 (million 480 lb. bales)
Production: 22.00
Mill Use: 36.25
Ending Stocks: 48.85
Ending Stocks/Mill Use Ratio: 134.8
%


Current India Balance Sheet (2016/2017)

Beginning Stocks: 10.94 (million 480 lb. bales)
Production: 27.00
Mill Use: 23.75
Ending Stocks: 11.59

Ending Stocks/Mill Use Ratio: 48.8%

Current USA Balance Sheet (2016/2017)
Beginning Stocks: 3.8 (million 480 lb. bales)
Production: 16.96

Mill Use: 3.30
Ending Stocks: 4.80
Ending Stocks/Mill Use Ratio: 145.5%

Producer / Merchant
    Long:  13,322  (Contracts)
    Short: 198,768
Swap Dealers
    Long:  64,923
    Short:  4,394
Managed Money
    Long:  107,645
    Short:  11,353
Other Reportables
    Long:  28,202
    Short:  7,060

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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