The Cotton Club Letter - For Week Ending 4/21/2017 | SterlingTerrell.net

The Cotton Club Letter - For Week Ending 4/21/2017

  Price Picture

Chart Source: Barchart.com

Trend Picture
Chart Source: Barchart.com

Nearby contract closed approximately 262
points higher over the last 30 days.
Managed money is net long.
Short-term, technical traders see possible support around 78.00, possible resistance around 80.00.
The trend is up.


May-17 is at:  77.61         Volume = 3,819
July-17 is at:   79.33         Volume = 129,383
Dec-17 is at:   74.96          Volume = 6,714
Cotlook 'A' Index is at: 87.80

Cash Sales

Recently, on 6,669 bales traded, the trading platform TheSeam.com reported an average cash price of approximately: 79.55.
On the nearby contract, that puts the average basis at approximately-194 points.
Cash prices are averaging approximately 25.87 cents over loan value.

Stocks and Sales
ICE Certified Cotton Stocks = 300
US Net Upland Export Sales (2016/2017) = 226,300
     China was the big buyer at 58,800. 

Current World Balance Sheet (2016/2017)
Beginning Stocks: 97.08 (million 480 lb. bales)
Production: 106.30
Mill Use: 112.59
Ending Stocks: 90.91
Ending Stocks/Mill Use Ratio: 80.7

Current China Balance Sheet (2016/2017)
Beginning Stocks: 58.20 (million 480 lb. bales)
Production: 22.75
Mill Use: 36.25
Ending Stocks: 49.15
Ending Stocks/Mill Use Ratio: 135.6

Current India Balance Sheet (2016/2017)

Beginning Stocks: 10.94 (million 480 lb. bales)
Production: 27.00
Mill Use: 23.75
Ending Stocks: 12.49
Ending Stocks/Mill Use Ratio: 52.6%

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

Mill Use: 3.30
Ending Stocks: 3.70
Ending Stocks/Mill Use Ratio: 112.1%

Producer / Merchant
    Long:  19,160  (Contracts)
    Short: 171,888
Swap Dealers
    Long:  61,356
    Short:  4,230
Managed Money
    Long:  89,586
    Short:  7,812
Other Reportables
    Long:  20,686
    Short:  12,815

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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