Managed Money Continues Slow Cattle Liquidation

Managed money continued the slow liquidation of its long live cattle futures positions in the week ended Tuesday, even though futures prices were rebounding from the most recent swing low, indicating a lack of confidence in the fledgling rally attempt.

The CFTC reported that managed money during the week reduced its net long positions to 105,448 contracts from 112,982 the previous week.  This isn’t a lot, but it’s the lowest net long position for managed money since the week ended Jan. 7 when it was 105,448.

Late last week, the Oct live cattle futures contract rose to new contract highs and may continue the trend after the USDA’s monthly Cattle-On-Feed report Friday showed fewer calves placed on feed in June than was expected.

That report put June placements at 1.455 million head, 94% of the same month a year ago.  The number was below the average of trade estimates but was well within the range. Since the number was below trade expectations, it means fewer fed cattle will be available for slaughter come fall than traders expected, and prices could go up.

However, an expected surge in summer fed cattle marketings following larger-than-expected first-quarter placements hasn’t happened.  These cattle may have been slid back a month or so, evening out the marketing dates.

Producers, during the latest CFTC reporting week covered some of their short positions but a chart of their net short positions remains about flat since the beginning of June.  Their net short position amounted to 148,061 contracts, compared with 160,106 the previous week.




Managed money cut its long position in corn futures last week as crop condition reports remained stellar across much of the Corn Belt.  The CFTC reported managed money as of Tuesday had a net long position of 101,518 contracts, down 19.44% from 126,018 the week before.

That puts managed money’s net long position at the lowest level since the week ended Feb. 18 when it was 57,823 contracts.

At the same time, producers continue to cover short positions.  The CFTC reported producer net short positions at 226,107 contracts, compared with 238,518 contracts the previous week.  It was the lowest net short position for producers since the week ended Feb. 18 when it was 224,213 contracts.

Since Tuesday the Dec corn contract may have begun a bounce.  The market spiked on Wednesday after setting a new contract low earlier but by Friday had worked higher.  The action over the latest week may be seen as a consolidation period.

And corn is starting the week higher.  Some traders will see the market being oversold or at least approaching oversold territory and will be ready to re-invest in long positions.

There also are signs of growing demand with the USDA reporting increased export sales interest at current prices.




Cash cattle prices last week rocketed $8 to $10 per cwt higher on a live basis as packer buyers sought to keep plants supplied.  Plant margins are said to be very profitable, encouraging slaughter rates that are as active as the cattle market will allow.

Cattle traded last week at mostly $164 to $166 per cwt live, a new record high, while dressed-basis trades were reported at $257 to $260, also a record.

The USDA’s boxed-beef cutout values continued to rise Friday, defying expectations of a summer lull.  The choice cutout was reported at $257.38 per cwt, up $1.82 for the day and up $8.93, or 3.59% from $248.45 a week earlier.  Select was $254.33, up $1.49 from Thursday and up $11.68, or 4.81%, for the week.