Managed Money Buys Cattle Futures

Managed money bought live cattle futures during the week ended Tuesday as the Jun contract rose sharply to challenge chart resistance.

The Commodity Futures Trading Commission’s weekly Commitments of Traders report for the week ended March 24, showed managed money, another name for large investors, buying a net 7,665 long cattle contracts while covering a net 1,308 shorts.

As of Tuesday, those traders’ long positions represented 28.6% of total open interest, while their short positions represented just 5.6%.

At the end of the reporting week, managed money had a net long position of 62,657 contracts, up 8,973, or 16.7%, from 53,684 a week earlier and their largest since the week ended Tuesday, Jan 27, when it was 62,751.

The latest week’s aggressive buying boosted total live cattle open interest by 12,307 contracts, or 4.74%, to 271,836 from 259,529 the previous week.

At the same time, nearby futures prices were moving higher.  The Jun contract moved to a high of $162.50 per cwt from a low of $153.05 the previous week, a jump of $9.45, or 6.17%.  However, the rally stalled later last week as the market began to approach chart resistance at the Feb. 26 spike high of $163.10.

During the latest reporting week, commercial traders increased their net short positions as producers took advantage of the sharp rise in prices to hedge more early summer production.

As of Tuesday, commercials had a net short position of 105,590 contracts, up 11,569, or 12.3% from 94,021 the previous week.  The CFTC said they added 12,528 short positions to their portfolios while boosting long positions by a net 959.

That left commercials representing 51.2% of total short open interest and 12.3% of total long open interest.

 

MANAGED MONEY DECREASES NET SHORT CORN POSITION

 

As the USDA’s all-important Prospective Plantings report Tuesday approaches, managed money covered much of its unusual short corn position during the latest reporting week.  As of Tuesday, they were net short by 20,927 contracts, down 43,131, or 66.8%, from 63,058 the previous week.

The CFTC said those large investors covered 31,636 short positions during the latest reporting week while selling 18,878 long positions.  As of Tuesday, their long position of 304,367 contracts left them representing 22.8% of total open interest while their short position of 523,643 contracts left them representing 39.3% of short open interest.

However, during the latest CFTC week, total open interest increased very little, rising just 2,623 contracts, or 0.20% to 1.334 million from 1.331 million.

Commercial traders were more aggressive about increasing their net short positions during the latest reporting week, rising to 219,278 contracts from 168,762 the previous week for a gain of 50,516, or 29.9%.

During the latest reporting week, the May corn futures contract rose to a high of $3.93 ¾ a bushel from the previous Tuesday’s low of $3.70.  While the contract dipped to a cycle low on that Wednesday, it rose a net $0.23 ¾, or 6.42%, during the latest CFTC reporting week.

 

CASH CATTLE TRADE HIGHER

 

Cash cattle markets last week traded higher, but the buyer/seller stare-down lasted until Friday afternoon.  Cattle  traded last week at $165 per cwt on a live basis, up about $2 from the previous week, and at $262 to $263 on a dressed basis, up about $4.

Boxed beef prices were narrowly mixed Friday with the USDA’s choice cutout up $0.13 per cwt at $250.80 and select down $0.25 to $246.71.  Volume was light, with 76 loads of fabricated product sold into the spot market.

The CME Feeder Cattle Index for the seven days ended Thursday was $216.71 per cwt, down $0.92.  Apr futures settled at $219.27, up $2.05.