Funds Liquidate Cattle Positions

Managed money funds continued to liquidate long live cattle positions in the week ended Tuesday, even though futures prices were rising rapidly, according to the Commodity Futures Trading Commission.

Managed money cut its nets long position to 18,367 contracts in the week, down 9,476, or 34.0%, from 27,843 the previous week.  It marks the ninth straight week of long liquidation by the funds.

At the same time, commercial traders, those who could make or take delivery of a futures contract, cut their net short positions to 61,248 contracts, the CFTC said.  This is down 10,019, or 14.1%, from 71,267 the previous week and marks the ninth straight week of short covering.

During the CFTC reporting week, the most-active Oct futures contract rose to a high of $148.70 per cwt from a low of $143.40 the week before.  During the week, the contract even gapped higher, leaving an open space on daily charts from the Friday, July 31, high of $146.52 to Monday’s low of $147.30.

Total live cattle open interest during the CFTC reporting week rose 1,139 contracts, or 0.47%, to 242,337 from 241,198.

Farnsfield Research says that when open interest and futures are rising new buyers and sellers are entering the market making it a stronger market.  However, with the largest speculators in the market liquidating, confidence in such strength may be low.

The CFTC report said managed money arrived at its new position by selling 5,984 contracts and covering 3,492 while liquidating 1,092 spread positions.  This left them representing 24.4% of total long open interest and 16.8% of total short open interest.




During the latest CFTC reporting week, large investment funds liquidated long corn positions as commercial traders covered short positions, the CFTC said.

Managed money sold 80,187 contracts during the week to arrive at their latest net position of 150,187 contracts, a drop of 34.8% from the previous week’s 230,374.

At the same time, commercial traders covered 52,582 net short positions to arrive at their new position of 380,369 contracts, a drop of 12.1% from 432,951.

The CFTC said managed money arrived at their new position be liquidating a net 18,932 contracts and buying 61,255 new short positions while liquidating 8,745 spread positions.  This left them representing 19.7% of total long open interest, almost the same as swap dealers who represented 18.4% of total long open interest.

Commercial traders arrived at their new position by adding 18,697 new long positions and covering 33,885 short positions.  This left them representing 20.8% of total long open interest and 48.6% of total short open interest.

During the latest reporting week, the most active Dec corn contract traded sideways to lower after dropping sharply in the two prior weeks.  The contract ended Tuesday with a low of $3.66 ¾ per bushel, down from the previous Tuesday’s high of $3.70.  The contract through Friday last week began moving higher and tried to break even higher in overnight trading.

Total open interest during the latest reporting week rose 17,961 contracts, or 1.33%, to 1.369 million contracts from 1.351 million.




Cash cattle markets last week traded Friday afternoon at mostly $150 per cwt with some up to $152, up $2 to $3, after trading $2 higher last week.  On a dressed basis, cattle traded at $236 to $238, up $4 from the previous week.

The USDA’s beef cutout values Friday were higher and resulted in a weekly gain.  The USDA reported its choice cutout at $236.34 per cwt, up $1.15 on the day and up $3.09 for the week.  Select was reported at $230.14, up $1.75 for the day and up $6.85 for the week.  Volume Friday was light with 67 loads of fabricated cuts being sold into the spot market.

The CME Feeder Cattle Index for the seven days ended Thursday was $217.13, up $0.06, compared with Friday’s Aug settlement of $214.12, down $0.85.