Managed Money Boosts Cattle Interest

Managed money expressed more interest in live cattle futures during the week ended Tuesday, just as Aug futures were consolidating a nearby bottom.

The Commodity Futures Trading Commission’s weekly Commitments of Traders report shows that, during the latest reporting week, managed money boosted its net long position to 112,982 contracts from 107,655 the previous week.

At the same time, producers increased their net short positions to 160,106 contracts from 158,176 the previous week.  Other reportable traders increased their net short positions to 15,458 contracts from 9,764 in the previous week.

During the week, total open interest fell 5,077 contracts to 340,438 on July 15 from 345,515 July 8.

So there was more trader interest to increase short positions or liquidate long positions, yet prices stopped falling and subsequently rose.


The CFTC said that during the week ended Tuesday, managed money reduced its net long position to 126,018 contracts from 133,177 the prior week.  Other reportable traders, i.e. small speculators, also were sellers, increasing their net short positions to 22,296 contracts from 9,485.

During the week, producers continued to cover short positions by going to a net short position of 238,518 contracts from 253,952 the week before.

At the time, Dec corn futures were dropping as crop conditions improved and weather forecasts were ideal for the bulk of the Central US, reducing weather fears to yield.  Since Tuesday, crop conditions remain elevated with no hint of widespread dryness anywhere except the western Plains.

Yet during the week, total corn open interest increased 22,038 contracts to 1,328,646 from 1,306,608.

The increase in open interest is surprising as futures prices were declining along with managed money participation.


Cash cattle prices in the Central and Southern Plains last week were higher than expected, pushing futures prices higher in response since futures already were trying to lead cash lower and were at an unacceptable discount to cash when trading occurred on Wednesday.

Cash cattle traded last week at mostly $155 to $156 per cwt on a live bases with instances of $157, steady to $1.00 lower than the previous week but higher than the $1 to $2 declines that were predicted.  On a dressed basis, cattle traded at $244 to $247 with instances of $248, down $1 to $2 for the week.

Slaughter last week was estimated at 459,000 head, up 3,000 from 456,000 the previous week, but 33,000 below the same week a year ago.  Slaughter remains below a year ago, even if it bounced from the previous week.

Feeder cattle prices remain very strong, although there are signs the market won’t tolerate any more increases for a while.  The CME Feeder Cattle Index, which is a good measure of overall feeder cattle prices since it uses auction prices at several auction barns to arrive at the index price, has stabilized after rising sharply since March.

The CME Index for the seven days ended Thursday was $214.48, up $0.37 from Wednesday.  By contrast, the Aug futures contract settled Friday at $151.62, up $0.97.


USDA boxed beef prices last week declined unevenly and came to rest Friday afternoon, with the choice cutout at $248.45 per cwt, down $1.36 for the day and down $3.34 for the week.  The select cutout declined $1.59 Friday to $242.65, a dip of $1.31 for the week.

The choice/select spread widened a bit on Friday to $5.80, and there were 111 loads of fabricated product sold into the spot market.