Funds Trim Cattle Position, Remain Very Long

Large commodity investment funds, or managed money, cut their net long live cattle futures position for the second straight week during the week ended last Tuesday.

At the same time, swap dealers boosted their net long position for the twelfth straight week, and commercial traders cut their net short position for the first time in 13 weeks, said the Commodity Futures Trading Commission in its weekly Commitments of Traders report Friday.

Managed money’s new net long cattle position was 92,400 contracts, down 6,933, or 6.98%, from 99,333 the previous week and off 12,608, or 12.0%, from its latest peak of 105,008 the week ended Jan. 31.

During the same week, commercial traders, those who own or handle cattle, cut their net short live cattle position to 158,182 contracts, down 2,548, or 1.59%, from 160,730.

Swap dealers, those who facilitate cash trades for a fee, raised their net long cattle position to 89,767 contracts, up 1,792, or 2.04%, from 87,975 the previous week, the largest net long position for these traders in at least three years.  These traders commonly have a net long position of around 55,000 contracts.

The CFTC said managed money arrived at its new net long position by liquidating 6,486 long positions and adding 447 short positions while unwinding 1,076 spread positions.  This left them representing 32.5% of total long open interest and 4.3% of total short open interest.

Swap dealers got to their new position by adding 1,708 long positions and covering 84 short positions while adding 1,246 spread positions, leaving them holding 28.7% of the total long open interest and 1.2% of the total short open interest.

Commercial traders arrived at their new position by liquidating 2,119 long positions and covering 4,667 short positions, leaving them in control of 7.7% of total long open interest and 56.0% of total short open interest.

During the latest CFTC reporting week, the most-active Apr futures contract fell to its latest swing low of $112.07 per cwt on Monday.  It settled the week at $114.00, down from the previous Tuesday’s close of $116.50.

 

FUNDS GO LONG CORN

 

Managed money increased its net long position in corn futures during the latest CFTC week to 97,199 contracts, up 61,282, or 170.6%, from 35,917.

Meanwhile, swap dealers added 9,528 contracts, or 3.48%, to their net long position to go to 283,406 contracts from 273,878, their largest net long position since the week ended Dec. 29, 2015.

Commercials extended their net short position 54,170 contracts, or 16.0%, to 392,049 contracts from 337,879, their largest since the week ended July 5, 2015.

 

CASH CATTLE TRADE QUIET

 

Average fed cattle exchange auction prices Wednesday were $1.36 per cwt higher at $119.02, versus $117.66 a week earlier.  However, only one trade was not from the Southern Plains where cattle sold last week at $120.21, and unsold cattle this week were from the north and were priced at $116 to $117.  Thus, in reality, the market traded about $1.19 lower.

Cash cattle trading was reported at $119 to $120 per cwt on a live basis, compared with last week at $119 to $120.50, mostly $119.75 to $120.50.  Dressed-basis trading was at $185 to $188, compared with $190 to $190.50.

The USDA’s choice cutout Friday was up $0.42 per cwt at $190.91, while select was up $1.16 at $190.40.  The choice/select spread narrowed to $0.51 from $1.03 with 98 loads of fabricated product sold into the spot market.

The CME Feeder Cattle Index for the seven days ended Thursday was $127.69 per cwt, down $0.33.  This compares with Friday’s Mar settlement of $124.07, up $0.25.