1-17-22 – Large commodity index funds, called managed money, took on a collectively longer net long live cattle futures position in the week ended last Tuesday, Jan. 10. During the same week, cattle owners, or commercial traders, took on a larger net short position.
The data came from the Commodity Futures Trading Commission’s weekly Commitments of Traders report Friday.
FUNDS BUY CATTLE
For the sixth straight week, managed money had a larger net long live cattle position than it did the week before. They now have their largest net long position since May 6, 2019, when it was 105,830 contracts. As of last Tuesday, they had a net long live cattle position of 91,803 contracts, up 6,934, or 8.17%, from 84,869 a week earlier.
Also as of last Tuesday, commercial traders had a total net short position of 119,268 contracts, up 5,852, or 5.16%, from 113,416 a week earlier. It was their largest net short position since Sep. 19 when it was 122,111 contracts.
The CFTC said managed money arrived at their new cattle position by adding 3,408 long positions, covering 3,526 short positions and unwinding 3,857 spread positions. This left them in control of 35.9% of total long open interest, 7.5% of total short open interest and 17.0% of total spread open interest.
Commercial traders got to where they were Tuesday by liquidating 1,026 long positions and putting on 4,826 short positions, leaving them holding 10.8% of total long open interest and 47.8% of total short open interest.
The CME Group said total live cattle open interest Tuesday stood at 322,340 contracts, down 10,284, or 3.09%, from 332,624 a week earlier.
CME data also showed that the most-active Apr live cattle contract rose in value during the CFTC week, settling last Tuesday at $161.65 per cwt, up from $160.87.
FUNDS SELL CORN
Meanwhile, managed money sold corn futures, ending last Tuesday with a net long position of 149,665 contracts, down 50,289, or 25.2%, from 199,954 a week earlier.
Commercial traders, though, bought corn, ending last Tuesday with a net short position of 397,760 contracts, down 40,718, or 9.29%, from 438,478 a week earlier.
The CFTC said managed money arrived at their new corn position by liquidating 34,434 long positions, adding 15,855 short positions and unwinding 5,292 spread positions. This left them holding 17.6% of total long open interest, 5.3% of total short open interest and 9.4% of total spread open interest.
Commercials got to where they were last Tuesday by adding 20,617 long positions and covering 20,101 short positions, leaving them with 25.2% of total long open interest and 57.9% of total short open interest.
The CME Group said total open interest was 1.215 million contracts, versus 1.221 million a week earlier.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers last week ranged from $156.92 to $158.85 per cwt, compared with the previous week’s range of $150.00 to $159.50. FOB dressed steers, and heifers went for $246.75 to $251.19 per cwt, versus $245.58 to $251.79.
The USDA choice cutout Friday was down $0.87 per cwt at $276.62 while select was off $0.12 at $256.89. The choice/select spread narrowed to $19.73 from $20.48 with 86 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 $1.95 to $2.10 a bushel over the Mar corn contract. Bids in Kansas were steady at $0.85 over the Mar, which settled at $6.75 a bushel, up $0.04.
The CME Feeder Cattle Index for the seven days ended Thursday was $182.03 per cwt down $0.33. This compares with Friday’s Jan contract settlement of $181.25 per cwt, down $0.87.
IN OUR OPINION
–Data show that inflation is cooling, but it’s still inflation. The labor market remains over-employed according to Econ 101 teachings, which will keep money flowing through the economy, countering efforts by the Federal Open Market Committee to stem the tide. This makes it hard for equities investors to decide how they should react to economic numbers.