Funds Buy More Cattle, Corn

After selling live cattle futures a week earlier, managed money, a proxy for large commodity investment funds, turned and bought cattle futures in the week ended Tuesday, the Commodity Futures Trading Commission said in its weekly Commitments of Traders report Friday.

At the same time, hedgers, known as commercial traders because they deal in the actual cattle traded in futures markets, expanded their net short position.

 

FUNDS BUY CATTLE

 

As of Tuesday, managed money had a collective net long live cattle futures position of 99,037 contracts, up 5,027, or 5.35%, from 94,010 a week earlier.

Commercial traders, Tuesday, had a total net short cattle position of 141,733 contracts, up 2,651, or 1.91%, from 139,082 a week earlier.

The CFTC said managed money arrived at their new net long cattle position by adding 3,434 long positions, covering 1,593 short positions and putting on 930 new spread positions.  This left them in charge of 34.9% of total long open interest, 4.3% of total short open interest and 14.0% of total spread open interest.

Commercial traders got to where they were Tuesday by adding 211 long positions and 2,862 short positions, leaving them holding 9.5% of total long open interest and 53.4% of total short open interest.

The CME Group said total live cattle open interest Tuesday was 321,235 contracts, up 298, or 0.09%, from 320,937 a week earlier.

CME data also showed that the most-active Aug futures contract rose in value during the CFTC-reporting week to settle Tuesday at $162.47 per cwt, compared with $161.55 a week earlier.

 

FUNDS ALSO BUY CORN

 

During the CFTC-reporting week, managed money also bought corn futures becoming less net short in the process.  As of Tuesday, they had a net short position of 87,661 contracts, down 16,844, or 16.1%, from 104,505 a week earlier.

Commercial traders Tuesday had a total net short position of 144,388 contracts, up 3,646, or 2.59%, from 140,742 a week earlier.

The CFTC said managed money arrived at their new Chicago corn position by adding 10,824 long positions, covering 6,020 short positions and unwinding 8,084 spread positions.  This left them holding 13.3% of total long open interest, 20.0% of total short open interest and 7.9% of total spread open interest.

Commercial traders got to where they were Tuesday by adding 17,066 long positions and 20,712 short positions, leaving them with 30.5% of total long open interest and 41.6% of total short open interest.

The CME Group said total corn open interest Tuesday was 1.293 million contracts, up 33,000, or 2.62%, from 1.260 million a week earlier.

CME data also showed that most-active Jul contract declined in value during the CFTC-reporting week, settling at $5.81 ¼ a bushel, versus $5.84 ¾.

 

CATTLE, BEEF RECAP

 

The USDA reported formula and contract base prices for live FOB steers and heifers last week ranged from $169.94 per cwt to $177.58, compared with the previous week’s range of $171.00 to $179.10 per cwt.  FOB dressed steers, and heifers went for $269.65 per cwt to $274.70, compared with $271.48 to $278.17.

The USDA choice cutout Friday was up $2.79 per cwt at $301.10 while select was up $0.33 at $283.94.  The choice/select spread widened to $17.16 from $14.70 with 73 loads of fabricated product and 19 loads of trimmings and grinds sold into the spot market.

The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.73 to $1.88 a bushel over the Jul corn contract, which settled at $5.54 1/2 a bushel, down $0.00 3/4.

The CME Feeder Cattle Index for the seven days ended Thursday was $202.36 per cwt, down $0.25.  This compares with Friday’s May contract settlement of $206.27 per cwt, up $0.17 and Aug’s $235.10, up $0.60.

 

IN OUR OPINION

 

–It looks like strong exports are supporting lean hog futures.  However, pork packers may not accelerate production so they have some control over pork prices.  Pork should get some support from rising beef prices, and perhaps it is, to some degree.  At any rate, packers won’t do anything to jeopardize the gains they are seeing.