Managed Money, Cattle Producers Keep Positions Nearly Steady

Managed money and cattle producers almost left their net futures positions unchanged during the week ended Tuesday as prices declined and open interest rose.

A declining market with rising open interest confirms a downward trend until the shorts begin to cover their positions in earnest, according to Open Interest Analysis by Farnsfield Research.  Wednesday through Friday of last week saw the Apr contract rise sharply.

During the week, the Commodity Futures Trading Commission’s weekly Commitments of Traders report said managed money barely made any changes in its long or short positions resulting in a net long position of 52,225 contracts.  This compared with 52,505 the week before, an increase of only 280 contracts, or 0.53%.

Cattle producers, merchants or processors, those who actually touch the animals, meanwhile, increased their net short positions slightly to 92,461 from 90,941 the week before, a rise of 1,520 contracts, or 1.67%.

The CFTC said that at the end of the latest reporting week, managed money’s long positions represented 28.4% of total open interest while their short positions represented only 7.0%.  Producers’ long positions represented 14.0% of total open interest while their short positions represented 51.9%.

During the latest reporting week, the nearby Feb live cattle contract declined from its most recent peak of $160.50 per cwt on Friday, Feb. 13, to its low of $154.60 set on Tuesday, Feb. 24.  Most of this decline came in the last half of the reporting week.

Total open interest during the week rose 1,902 contracts, or 0.79%, to 243,465 from 241,563.




During the same CFTC reporting week, total corn open interest and prices declined amid active liquidation by managed money and new short positions by producers.

Declining open interest along with declining prices is a sign that longs are liquidating more aggressively than they are being established.  This type of liquidating market is considered technically strong, and the market turned higher last week after the CFTC’s week ended.

The CFTC reported that managed money’s new net long position as of Tuesday was 62,886 contracts, down 17,097, or 21.4%, from 79,983 the previous week.  Broken down, managed money liquidated 3,212 long contracts while adding 13,885 short positions.

Meanwhile, the net short positions of producers, merchants and processors rose 25,297 contracts, or 10.4%, to 268,249 from 243,352 the previous week.  These traders liquidated 55,072 long positions while adding 29,777 shorts.

As of Tuesday, managed money’s long corn position represented 16.8% of total open interest, and their short positions represented 12.0%.  Producers, however, held 22.4% of total long open interest and 43.1% of total short open interest.




Cash cattle markets last week weakened from the previous week, although prices tended to rise during the week in a hard-fought battle among buyers and sellers.

In the end, last week’s price ranges were $157 to $159 per cwt on a live basis and $250 to $254 in Nebraska’s dressed market.  These prices compare with $158 to $160 live and $254 to $258 dressed the previous week.

Spot market boxed beef prices Friday were higher, with the USDA’s choice cutout up $0.55 per cwt at $247.58 and select down $0.67 at $245.57.  The choice/select spread continues to narrow, moving to $2.01 on Friday.

Friday’s prices were up from a week earlier with choice rising $7.27, or 3.03%, while select was up $7.78, or 3.27%.

The CME Feeder Cattle Index for the seven days ended Thursday was down $0.55 per cwt to $207.72 from $208.27.