Managed Money Increases Live Cattle Longs

Managed money increased its live cattle futures net long position in the week ended Tuesday, keeping its position nearly flat for the last five weeks, according to the Commodity Futures Trading Commission’s weekly Commitments Of Traders report.

In the latest reporting week, large speculative firms raised their net long positions to 110,945 contracts, up 3,755, or 3.50%, from the week before, but up only 1,009 contracts, or 0.92%, from 109,936 the previous week.

During the latest reporting week, the Dec live cattle futures contract rose $4.38, or 2.68%, to settle at $167.85 per cwt from $163.47 the previous week.

Tuesday’s high, however, almost topped out the latest cycle high, with Dec turning in an inside day on Wednesday, a major reversal day on Thursday and a gap lower on Friday that a late rally did not fill.

Meanwhile, cattle producers extended their short positions, putting them at the shortest they have been since the week ended Tuesday, Sep. 9.  The CFTC said cattle producers most recently held 150,388 net short positions, an increase of 8,744, or 6.17%, from 141,644 the previous week.  It also was the largest short position for producers since 150,666 the week ended Tuesday, Sep. 9.

Sources say it looks like the market wants to take some out of this cattle market.  The market had become overbought, and another week of anemic cash cattle trading, albeit at higher prices, apparently was a good enough excuse for futures traders to take profits ahead of the weekend.

 

MANAGED MONEY DROPS MORE LONG CORN POSITIONS

 

Although managed money increased its net long positions in live cattle futures, such was not the case with corn.  The CFTC reported that managed money ended the latest reporting week with 58,274 net long positions, down 11,970, or 17.0%, from 70,244 the previous week.

Managed money’s net long position also was down 206,139 contracts, or 78.0%, from the peak of 264,413 contracts, the week ended April 1.  Speculative interest in corn seemed to wane a little more with each crop report showing an increased likelihood of a record corn crop in the US and in other major exporting countries.

The latest move put managed money at the lowest net long position since the week ended Tuesday, Feb. 18, when it was 57,823.

Corn producers extended their run of expanding their short positions during the latest reporting week by ending the period with 254,231 contracts, up 11,371, or 4.68%, from the previous week when it was 242,860 net short positions.

Corn producers haven’t been this short since the week ended July 1 when it was 256,540 contracts.

During the latest reporting week, the Dec corn contract rose $0.12 ¾ to settle at $3.40 ½ a bushel, from its contract low settlement of $3.20 ¾ the previous Tuesday.  The contract has since turned lower amid exquisite harvest reports.

 

CASH CATTLE MARKETS MOVE HIGHER

 

Despite reports of limited volume cash cattle markets moved $3.00 to $5.00 per cwt higher to trade at $164 on a live basis and $163 to $165 on a dressed basis.  The market was led by a robust beef market that saw the USDA choice cutout value go up $9.35 per cwt from the previous week to end Friday at $247.67.  The select cutout was $8.38 higher from the previous week to end at $234.74.

The higher beef prices were thought to have put packer margins into the black, but the higher prices they had to pay for fresh slaughter inventory doesn’t bode well for their outlook.

Packers also are worried about the rising US Dollar and its implications for reducing export demand.