Managed Money Adds Short Cattle Positions

After a week of buying live cattle futures contracts, managed money added more short positions to their portfolios than they did long positions, resulting in a decline in their net long positions during the week ended Tuesday, Jan. 6.

The Commodity Futures Trading Commission Friday reported that managed money, a proxy for large investors, had a net long position of 81,179 contracts as of Tuesday, compared with 81,932 the previous week and 73,414 the week before that.

The CFTC reported that during the latest reporting week, managed money added 2,299 short positions while buying 1,546 long positions.  These investors held 33.5% of the open long positions and 3.7% of the open short positions.

Producers made similar, but opposite, moves with their net short positions.  At the end of the latest reporting period, producers held 122,467 net short positions, compared with 126,090 the previous week and 122,881 the week before that.

Friday’s CFTC report showed that producers covered 3,199 short positions while adding just 424.  This left them holding 54.3% of the open short positions and 9.5% of the long positions.

During the latest reporting week, the Feb futures contract traded mostly sideways but in a fairly wide range.  The contract settled Tuesday at $166.02 per cwt and began on Tuesday, Dec. 30 with a close of $165.87.  In between, it hit a high on Wednesday of $166.00 and a low on Wednesday, Dec. 31, of $162.67.

Since then, the contract has fallen to Friday’s low and close of $160.60 and appears to have bearish momentum.

Overall live cattle liquidation took place during the latest CFTC reporting week with open interest declining 6,577 contracts, or 8.90%, from 273,093 the previous week.




During the latest reporting week, corn producers and other commercials covered 19,051 short positions while adding 26,215 longs, resulting in a net short position of 379,535 contracts.  This was down 45,266, or 10.7%, fewer than the previous week and the lowest net short position since the week ended Dec. 2 when it was 360,932 contracts.

Managed money, meanwhile, added to their short positions to the tune of 10,854 contracts versus only 557 long positions to leave themselves net long by 221,001 contracts in the latest week, the CFTC reported.  This is down 10,297 contracts, or 4.45%, from 231,298 the previous week.

During the latest CFTC week, the nearby Mar contract declined $0.01 a bushel to $4.05 ½ from 4.06 ½ the previous week.  It has since traded sideways awaiting this morning’s release of multiple USDA reports.

Total corn open interest also declined the latest CFTC reporting week, going to 1.230 million from 1.258 million, a drop of 28,000, or 2.23%.




Cash cattle markets last week traded mostly $2 to $4 per cwt higher at $167 to $172 on a live basis.  Many considered this to be strength derived from stronger beef prices, which rose last week.  The USDA reported its choice beef cutout up $7.76 per cwt, or 3.12%, to $256.79 from $249.03 a week earlier.

The USDA’s select beef cutout was up $7.83, or 3.26%, to $248.23 from $240.40 a week earlier.

Cash cattle prices, however, showed a chink in the armor late in the week.  Where cattle traded at $168 per cwt live and rose to a high of $172 early in the week, there were a few that traded late in the week at $167.

Those could have been lower-quality cattle, or they could have been the result of a holdout seller giving in to move inventory.