Market Analyst Craig Turner, author of Turner’s Take, said commodity investment funds, called managed money, were trapped with a large collective net long live cattle futures position, just when the market turned bearish.
The Commodity Futures Trading Commission reported in its weekly Commitments of Traders report Friday that, as of Tuesday, managed money had a collective net long live cattle position of 129,541 contracts, down 25,642, or 16.5%, from a record high of 155,183 just a week earlier.
At the same time, commercial traders, those who own the cattle and theoretically could make or take delivery of a futures contract, cut their record net short position, going to a net short position of 213,945 down 12,732, or 5.62%, from 226,677 the previous Tuesday.
The CFTC said managed money arrived at its new net long position by liquidating 29,272 long positions, covering 3,630 short positions and putting on 1,362 new spread positions. This left their net long position representing 33.3% of total long open interest, 2.3% of total short open interest and 15.6% of total spread open interest.
Commercials got to their new short position by liquidating 2,520 long positions and covering 15,252 short positions, leaving them holding 5.6% of total long open interest and 56.8% of total short open interest.
The CME Group said total live cattle open interest as of Tuesday stood at 417,852 contracts, down 33,834, or 7.49%, from 451,686 the previous Tuesday.
CME Group data also showed that the most-active Jun live cattle contract fell sharply during the CFTC reporting week, settling Tuesday at $114.25 per cwt, down $6.87, or 5.67%, from $121.12 a week earlier. The contract has since continued to decline.
FUNDS BUY CORN
During the same CFTC reporting week, managed money bought corn futures, ending Tuesday with a net short position of 318,964 contracts, down 25,221, or 7.33%, from 344,185 the previous week.
Commercials also took on a less-short corn position, trimming their net short position to 10,213 contracts from 15,236 the week before, a decline of 5,023, or 33.0%.
The CFTC said managed money arrived at its new corn position by adding 2,702 long positions, covering 22,519 short positions and unwinding 7,996 spread positions. This left their net short position representing 11.5% of total long open interest, 31.0% of total short open interest and 13.3% of total spread open interest.
Commercials got to where they were on Tuesday by liquidating 92,897 long positions and covering 97,920 short positions, leaving them holding 30.6% of total long open interest and 31.2% of total short open interest.
The CME Group said total corn open interest on Tuesday was 1.637 million contracts, down 204,648, or 11.1%, from 1.841 million a week earlier.
The most-active Jul corn contract had a small net gain for the week, settling Tuesday at $3.62 ½ a bushel, up $0.02 ¼, or 0.62%, from $3.60 ¼ a week earlier. In between, it set a new contract low of $3.51 ½ a bushel on Thursday.
CATTLE, BEEF RECAP
Cash cattle trading was reported last week at $123 to $124 per cwt on a live basis, down $3 from the previous week. Dressed-basis trade was reported at $200 per cwt, down $5.
The USDA choice cutout Friday was down $1.44 per cwt at $227.36, while select was down $1.79 at $213.29. The choice/select spread widened to $14.07 from $13.72 with 78 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Thursday, was $141.18 per cwt, down $2.72. This compares with Friday’s May contract settlement of $137.15, down $1.82.