For the third straight week, large commodity investment funds, known as managed money, kept pressure on live cattle futures by liquidating part of their large net long position.
The Commodity Futures Trading Commission’s weekly Commitments of Traders report Friday showed that, as of Tuesday, managed money had a collective net long position of 87,039 contracts, down 18,791, or 17.8%, from 105,830 the previous week and 68,144, or 43.9%, off the record high of 155,183 just four weeks earlier.
At the same time, those who own the cattle and primarily use the futures market to hedge their cash position, called commercial traders, cut their collective net short futures position to 186,548 contracts from 197,437 the previous week, a decline of 10,886, or 5.51%. Their new short position is down 40,129 contracts, or 17.7%, from their high of 226,677 contracts four weeks earlier.
The Commitments of Traders report said managed money arrived at its new cattle position by liquidating 13,080 long positions, adding 5,711 short positions and putting on 5,141 new spread positions. This left their position representing 26.8% of total long open interest, 3.9% of total short open interest and 15.6% of total spread open interest.
Commercials got to where they were by adding 2,805 long positions and covering 8,084 short positions, leaving them in charge of 7.1% of total long open interest and 56.2% of total short open interest.
CME Group data show the total open interest in live cattle futures Tuesday was 380,300 contracts, down 3,088, or 0.81%, from 383,388 a week earlier.
The CME Group also said that the most-active Aug live cattle futures contract declined during the CFTC reporting week to settle Tuesday at $106,725 per cwt, compared with $109.07 the week before.
However, since then, the contract has risen and passed some key resistance points, suggesting managed money and other sellers were satisfied with the selloff, an analyst said. The 14-day relative-strength index also appears to have bottomed.
FUNDS TEMPER CORN BUYING
During the week ended Tuesday, managed money toned down its recent buying streak in the corn futures market, cutting its net short position by just 2,553 contracts, or 0.86%, to 298,551 contracts from 295,998 a week earlier.
At the same time, commercial traders, cut their own net short corn position by 12,773 contracts, or 36.9%, to 21,856 contracts from 34,629 the previous Tuesday.
The CFTC said managed money arrived at its new short corn position by liquidating 7,638 long positions, covering 5,085 short positions and unwinding 10,970 spread positions. This left them holding 11.3% of total long open interest, 29.5% of total short open interest and 12.2% of total spread open interest.
Commercials got to where they were Tuesday by adding 20,450 long positions and 7,677 short positions, leaving them in control of 30.3% of total long open interest and 31.6% of total short open interest.
Total corn open interest during the week rose to 1.637 million contracts from 1.613 million, a gain of 24,366, or 1.51%.
CATTLE, BEEF RECAP
Cash cattle trading took place last week in the Plains at $117 to $118 per cwt, down $3 from the previous week. Dressed-basis trade took place at $190 per cwt, down $3 to $5.
The USDA choice cutout Friday was up $0.75 per cwt at $220.31, while select was up $0.40 at $208.28. The choice/select spread widened to $12.03 from $11.68 with 80 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Thursday, was $132.76 per cwt, down $0.30. This compares with Friday’s May contract settlement of $134.52, up $0.30.