Funds Liquidate Live Cattle Contracts

Large commodity investment firms, known as managed money, liquidated live cattle futures contracts aggressively during the week ended Tuesday, the second straight week of selling after hitting a one-month high Jan. 21.

The data came from the Commodity Futures Trading Commission in its weekly Commitments of Traders report Friday.  The report went on to show that managed money’s collective net long position was at 51,369 contracts Tuesday, down from 67,128 the week before and down from the latest high of 85,392 the week before that.

That means, managed money’s net long position declined 15,759 contracts, or 23.5%, in the latest CFTC reporting week and 34,023, or 39.8%, in just two weeks.  Their net long position as of Tuesday was the lowest since Oct. 29 when it was 38,273 contracts.

At the same time, commercial traders, those who own the cattle and primarily use futures as a hedging tool, cut their collective net short live cattle futures position by 4,768 contracts, or 3.24%, to 147,112 contracts from 151,880 the previous week.  Their new position also was down 15,351, or 9.45%, from their latest high of 162,463 contracts in the week before that.

The CFTC said managed money arrived at its new net long live cattle position by liquidating 19,167 long positions, covering 3,408 short positions and unwinding 5,089 spread positions.  This left their position representing 22.8% of total long open interest, 7.9% of total short open interest and 15.9% of total spread open interest.

The CME Group said total live cattle open interest as of Tuesday stood at 343,486 contracts, down 26,704, or 7.21%, from 370,190 the week before.

CME Group data also showed that the most-active Apr contract had a net decline during the week ended Tuesday, closing at $120.65 per cwt, compared with $120.70 the previous Tuesday.  However, during the week it hit a low of $120.72 on Monday and a high of $121.80 on Tuesday.




Managed money also sold Chicago corn futures in the week ended Tuesday, ending a seven-week run of short covering.  Their new collective net short position Tuesday stood at 52,045 contracts, up 26,655, or 105.0%, from their 5 ½-month low of 25,390 contracts the previous Tuesday.

Meanwhile, commercials covered short positions to the tune of 15,858 contracts, or 5.30%, coming in at 283,267 contracts, compared with 299,125 the previous Tuesday.

The CFTC said managed money arrived at their new short corn position by liquidating 11,309 long positions, adding 15,356 short positions and putting on 9,550 new spread positions.  This left their position representing 11.2% of total long open interest, 14.5% of total short open interest and 16.1% of total spread open interest.

Commercials got to where they were by adding 9,708 long positions and covering 6,150, leaving them in charge of 25.5% of total long open interest and 43.6% of total short open interest.

Total corn open interest Tuesday was 1.567 million, versus 1.528 million a week earlier.




Cash cattle trading was reported last week in the Plains at $121 per cwt, down $1 to $1.50 from the previous week, with some in the western Corn Belt at $122.  Dressed-basis trading came in at $192 to $193, down $2.

The USDA choice cutout Friday was down $0.81 per cwt at $210.12, while select was off $2.07 at $203.89.  The choice/select spread widened to $6.23 from $4.97 with 78 loads of fabricated product sold into the spot market.

The CME Feeder Cattle index for the seven days ended Thursday was $140.63 per cwt, down $0.90.  This compares with Friday’s Mar contract settlement of $135.20, down $0.70.