Funds Trim More Long Beef Exposure

Large commodity investment firms, known as managed money, divested themselves of more live cattle futures positions in the week ended Tuesday, adding selling pressure to an already weak futures market.

Data revealing the decline in the collective net long positions of managed money came from the Commodity Futures Trading Commission’s weekly Commitments of Traders report Friday.

In that report, the CFTC showed that the net long position of managed money declined for the second straight week to 105,830 contracts, down 23,711, or 18.3%, from 129,541 the previous Tuesday.

During the same week, commercial traders, those who own the cattle and largely are hedgers, cut their collective net short position to 197,437 contracts from 213,945, a decline of 16,508, or 7.72%.

The CFTC said managed money arrived at its new net long cattle position by liquidating 23,953 long positions, covering 242 short positions and unwinding 10,820 spread positions.  This left their position representing 30.0% of total long open interest, 2.4% of total short open interest and 14.1% of total spread open interest.

The CME Group said total live cattle futures open interest on Tuesday totaled 383,388 contracts, down 34,464, or 8.25%, from 417,852 a week earlier.

CME Group data also showed that the most-active Jun futures contract declined during the CFTC reporting week to settle Tuesday at $112.27 per cwt from $114.25, a drop of $1.98, or 1.73%.




During the same CFTC reporting week, managed money cut its net short corn position for the second straight week.  Their new position was short by 295,998 contracts, down 22,966, or 7.20%, from 318,964 the week before.

By contrast, commercial traders added to their net short position during the CFTC reporting week.  The new position for these traders was 34,629 contracts, up from 10,213, a gain of 24,416, or 239.1%.

The CFTC said managed money arrived at its new net short corn position by adding 3,952 long positions, covering 19,014 short positions and unwinding 7,588 spread positions.  This left them holding 11.9% of total long open interest, 30.3% of total short open interest and 13.0% of total spread open interest.

Commercial traders, meanwhile, got to where they were Tuesday by liquidating 25,681 long positions and covering 1,265 short positions, leaving them in control of 29.5% of total long open interest and 31.6% of total short open interest.

The CME Group said total corn open interest as of Tuesday was 1.613 million contracts, down from 1.637 million the week before.  This was a decline of 24,236 contracts, or 1.48%.

CME Group data also showed that the most-active Jul corn futures delivery month had a net gain during the CFTC week to settle at $3.66 ½ a bushel, compared with $3.62 ½, a gain of $0.04, or 1.10%.  In between, the Jul contract rose to a cycle high of $3.71 ¾ a bushel.

However, the Jul contract dropped Friday to a contract low of $3.45 ½ on Friday.




Cash cattle trading was reported last week at $120 to $121 per cwt on a live basis, down $3 from the previous week.  Dressed-basis trading was reported at $195 per cwt, down $5.

The USDA choice cutout Friday was down $1.36 per cwt at $221.11, while select was up $0.38 at $207.46.  The choice/select spread narrowed to $13.65 from $15.39 with 75 loads of fabricated product sold into the spot market.

The CME Feeder Cattle index for the seven days ended Thursday, was $135.52 per cwt, down $0.32.  This compares with Friday’s May contract settlement of $137.62, up $1.37.