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The Cotton Club Letter - For Week Ending 3/24/2017 | SterlingTerrell.net

The Cotton Club Letter - For Week Ending 3/24/2017



  Price Picture


Chart Source: Barchart.com


Trend Picture
Chart Source: Barchart.com


Notes
Nearby contract closed approximately 86
points lower this week.
Managed money is net long.
Short-term, technical traders see possible support around 77.00, possible resistance around 78.70.
The trend is up.

Price

May-17 is at:  77.47         Volume = 14,784
July-17 is at:   78.74         Volume = 8,110
Dec-17 is at:   75.49          Volume = 4,284
Cotlook 'A' Index is at: 86.85

Cash Sales

Recently, on 16,340 bales traded, the trading platform TheSeam.com reported an average cash price of approximately: 79.85.
On the nearby contract, that puts the average basis at approximately-238 points.
Cash prices are averaging approximately 24.90 cents over loan value.

Stocks and Sales
ICE Certified Cotton Stocks = 326
,221
US Net Upland Export Sales (2016/2017) = 328,200
     China was the big buyer at 98,100. 

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:  15,715  (Contracts)
    Short: 202,441
Swap Dealers
    Long:  64,757
    Short:  5,189
Managed Money
    Long:  114,480
    Short:  9,816
Other Reportables
    Long:  26,079
    Short:  9,950

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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