The Cotton Club Letter - For Week Ending 3/10/2017 | SterlingTerrell.net

The Cotton Club Letter - For Week Ending 3/10/2017

  Price Picture

Chart Source: Barchart.com

Trend Picture
Chart Source: Barchart.com

Nearby contract closed approximately 100
points lower this week.
Managed money is net long.
Short-term, technical traders see possible support around 77.00, possible resistance around 78.60.
The trend is up.


May-17 is at:  77.29         Volume = 11,248
July-17 is at:   78.37         Volume = 6,421
Dec-17 is at:   75.29          Volume = 3,594
Cotlook 'A' Index is at: 87.10

Cash Sales

Recently, on 4,521 bales traded, the trading platform TheSeam.com reported an average cash price of approximately: 71.50.
On the nearby contract, that puts the average basis at approximately-579 points.
Cash prices are averaging approximately 20.66 cents over loan value.

Stocks and Sales
ICE Certified Cotton Stocks = 324
US Net Upland Export Sales (2016/2017) = 248,900
     Indonesia was the big buyer at 68,400. 

Current World Balance Sheet (2016/2017)
Beginning Stocks: 97.09 (million 480 lb. bales)
Production: 105.72
Mill Use: 112.43
Ending Stocks: 90.48
Ending Stocks/Mill Use Ratio: 80.5

Current China Balance Sheet (2016/2017)
Beginning Stocks: 58.20 (million 480 lb. bales)
Production: 22.00
Mill Use: 36.25
Ending Stocks: 48.90
Ending Stocks/Mill Use Ratio: 134.9

Current India Balance Sheet (2016/2017)

Beginning Stocks: 10.94 (million 480 lb. bales)
Production: 27.00
Mill Use: 23.75
Ending Stocks: 11.89

Ending Stocks/Mill Use Ratio: 50.1%

Current USA Balance Sheet (2016/2017)
Beginning Stocks: 3.8 (million 480 lb. bales)
Production: 17.23

Mill Use: 3.30
Ending Stocks: 4.50
Ending Stocks/Mill Use Ratio: 136.4%

Producer / Merchant
    Long:  15,331  (Contracts)
    Short: 209,855
Swap Dealers
    Long:  64,711
    Short:  5,240
Managed Money
    Long:  113,694
    Short:  8,400
Other Reportables
    Long:  29,613
    Short:  8,240

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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