Managed Money, Cattle Producers Narrow Positions

Managed money and cattle producers took themselves to the lowest net long or short positions in more than a year during the week ended Tuesday, the Commodity Futures Trading Commission said.

Managed money liquidated long positions, while producers covered short positions.

The CFTC’s weekly Commitments of Traders report showed managed money with a net 70,319 long cattle positions as of Tuesday, down 11,026, or 13.6%, from 81,345 the previous week.  Managed money liquidated 12,121 long positions during the week while only covering 1,095 short positions.

By Tuesday, managed money controlled 29.2% of the open long positions of live cattle futures, the CFTC said.

Meanwhile, producers covered 6,966 short positions while adding 2,588 longs, leaving them with 110,015 net short positions, down 9,554, or 7.99%, from 119,569 the previous week.

The CFTC said that as of Tuesday, producers controlled 53.9% of the open short positions and 11.0% of open long positions.

During the latest CTFC week, live cattle futures prices fell sharply.  The Apr contract dropped $4.40 per cwt, or 2.79%, to close at $153.05, compared with $157.45 the previous week.

That was the lowest close since Sep. 2 when the contract closed at $151.85.

Cattle open interest during the latest reporting week declined 13,406 contracts, or 4.97%, to 256,457 from 269,863, the CME said.




Managed money also liquidated corn futures contracts during the latest reporting week.  The CFTC said these investors ended with a net position of 185,148 long corn contracts, down 9,534, or 4.90%, from 194,682 the previous week and the lowest net long position since the week ended Tuesday, Nov. 4, when it was 160,170.

Producers, however, covered a net 21,521, or 6.51%, short positions, taking them to 308,984 from 330,505 the previous week, the CFTC said.  This is the smallest net short position for producers since the week ended Tuesday, Oct. 28, when it was 296,348.

During the latest week, corn futures dropped sharply only to post a small rally that did not make up for the drop.  The Mar contract, for instance, settled Tuesday at $3.90 ¼ a bushel, down $0.04 ½, or 1.17%, from $3.85 ¾ a week earlier.

But Wednesday of the latest reporting week saw Mar corn fall to a 1 ½-month swing low of $3.76 a bushel, the lowest since Dec. 9 when it was $3.74 ¾, before rallying for the next four days.

Total open interest during the latest reporting week grew 26,667 contracts, or 2.09%, to 1.302 million from 1.275 million, the CME said.




Cash cattle prices in the Southern Plains fell about $6 per cwt last week to $158 to $160 on a live basis.  Action was considered moderate.

Packer buyers dropped to $158 per cwt on Wednesday after trading at $159 to $160 Tuesday following futures’ decline Tuesday, but buyers had to reconsider because selling interest at the lower bid was considered by many cattle feeders to be too low.

Beef prices weakened last week, especially choice product, narrowing the choice/select spread.  Lower beef prices could take packer buyers’ bids lower this week as they attempt to compensate for lower product prices.

The USDA reported its choice cutout Friday at $253.74 per cwt, down $1.91 on the day and $6.71 for the week.  Select was $247.23, down $1.66 from Thursday and down $3.61.  The choice/select spread narrowed to $6.51.

The CME Feeder Cattle Index for the seven days ended Thursday was $220.45, up $0.22 from the previous day.  In contrast, the Jan futures contract, with expires Thursday settled Friday at $213.70 per cwt, down $2.27.