The greenback soared after Japan cut interest rates into negative territory. U.S. export commitments reached 60% of the USDA projection and shipments 29%.
U.S. cotton futures finished lower in brisk activity Friday amid a surge in the U.S. dollar index against a basket of currencies.
- Spot March settled down 23 points to 61.13 cents, in the lower third of its 113-point range from up 53 points at 61.89 to down 60 points at 60.76 cents. March lost 132 points for the week and 215 points or 3.4% for the month. This was its lowest weekly close since Oct. 2.
- May dropped 31 points to close at 61.60 cents, July fell 59 points to 61.93 cents and December dropped 49 points to 61.39 cents.
- Volume rose to an estimated 39,243 lots — second largest of the year — from 32,939 lots the prior day when spreads accounted for 15,029 lots or 46% and EFP 18 lots. Options volume totaled 1,555 calls and 2,207 puts.
Dollar index futures leaped after the Bank of Japan stunned markets by cutting interest rates into negative territory for the first time in its history. The greenback futures traded up a bulging 1.125 to 99.665 heading into the cotton close.
The move by Japan’s central bank was viewed as a desperate attempt to keep the economy from sliding back into the stagnation that has dogged it for much of the last two decades.
Negative interest rates are expected to push money out of Japan and into the United States, where borrowing costs are comparatively high, a move that would weigh on the yen while boosting the dollar, reports indicated.
The cotton market initially dipped modestly and quickly bounced to the plus side after U.S. weekly upland export sales came in at the lower end of the range of expectations. It then fell to the session low, bounced to near unchanged in the late going, and again backed down.
All-cotton export sales for shipment this season of 158,600 running bales during the week ended Jan. 21, down from 205,100 RB the previous week, boosted 2015-16 commitments to 5.828 million RB.
The gap behind commitments a year ago widened 401,000 RB to 3.334 million RB or to 36%. Commitments reached 60% of the USDA export forecast, compared with 84% of final shipments at the corresponding point last season.
All-cotton shipments of 162,800 RB, up from 144,700 RB the week before, brought the total for the season to 2.831 million RB, down 445,000 RB or 14% from exports a year ago.
Cumulative shipments amounted to 29% of the USDA projection, which is 11% below 2014-15 exports. Shipments at the comparable point last season totaled 30% of final exports.
Shipments need to average roughly 254,400 RB a week to achieve the USDA projection, while weekly sales averaging approximately 143,300 RB would match the export estimate.
Sales for shipment next season of 68,700 RB, up from 10,300 RB the prior week, boosted 2016-17 commitments to 828,100 RB, widening the lead over forward bookings a year ago to 249,700 RB.
Futures open interest grew 1,130 lots Thursday to 195,709, with MarchΆs down 2,853 lots to 110,104 and MayΆs up 2,660 lots to 43,062. The beginning of rollovers by hedge and index funds contributed to switch activity this week.
Certificated stocks fell 3,331 bales to 28,706. The exchange said in a note that a decertification listed for Memphis was incorrect because of a technical issue and that the correct figure was 3,331. This reduced cert stocks there to 19,127 bales.
