Managed Money Cuts Long Cattle Position

Managed money, a term for investment funds, cut its net long position for live cattle futures to its lowest level in more than a year, which may have contributed to the demise of the latest rally attempt.

The Commodity Futures Trading Commission’s weekly Commitments of Traders report Friday for the week ended Tuesday said managed money had a net long position of 10,383 live cattle contracts.  This was down 2,042 contracts, or 16.4%, from 12,425 the week before.

During the same week, commercial traders, those who potentially could make or take delivery, reduced their net short position to 37,432 contracts from 42,928 contracts the previous week, a decline of 5,496, or 12.8%.

During the reporting week, the most-active Dec futures contract tried to rally but failed.  The contract settled Tuesday, Sep. 8, at 143.47 per cwt, moved up to Wednesday’s cycle high of $144.42, only to close Wednesday at $142.97.  It settled Tuesday, Sep 15, at $140.60 and has continued to move to new lows since then.

The CFTC said managed money arrived at its new net long position by liquidating 418 long contracts and adding 278 short positions while tacking on 338 new spread positions.  This left them in control of 17.9% of total long open interest and 13.3% of total short open interest.

Commercial traders, meanwhile, bought 353 new long positions while adding just 25 new short positions to leave them representing 14.7% of total long open interest and 15.8% of total short open interest.

Total open interest during the week rose, 6,808 contracts, or 2.69%, to 259,880 from 253,072.

 

MANAGED MONEY BUILDS LONG CORN POSITION

 

During the latest reporting week, managed money built its net long corn position to 71,851 contracts, from 52,199 the previous week.  This is a gain of 19,652 contracts, or 37.6%.

Meanwhile, commercial traders added to their cumulative net short position, reversing a seven-week slide.  Their new net short position Tuesday was 305,256 contracts, up from 266,124 the week before, for a gain of 39,132, or 14.7%.

Total open interest during the week rose 22,241 contracts, or 1.82%, to 1.247 million from 1.225 million.

The CFTC COT breakdown showed that managed money arrived at their new net long position by adding 4,975 long contracts and covering 14,677 shorts.  They also added 1,060 spread positions.  This left them in control of 19.3% of total long open interest and 13.5% of total short open interest.

Commercial traders arrived at their new position by selling 9,798 long positions and adding 29,334 new short positions.  This left them representing 22.0% of total long open interest and 46.5% of total short open interest.

During the week, the most-active Sep corn contract rallied sharply to peak on Tuesday, Sep. 15, at $3.95 a bushel.  The market was rallying from a low the previous Friday, Sep. 4 of $3.46 ¾ a bushel.  Since the latest peak on Tuesday last week, the market has declined sharply and has almost filled a chart gap left on Monday at $3.74 ¾.

 

CASH FED CATTLE TRADE LOWER

 

Cash cattle traded last week at $135 to mostly $136 per cwt on a live basis last week, about $4 to $6 lower than the previous week, with light trading in Texas.  In Nebraska’s dressed market, sales were done at $214 to $215, down $3 to $5.

The USDA reported sharply lower boxed beef prices Friday with its choice cutout down $4.20 per cwt at $226.30 and select off $2.44 at $219.26 with only 87 loads of fabricated product sold into the spot market.

For the week, the choice cutout lost $9.79 per cwt, or 4.15%, in value from $236.09, while select lost $7.47, or 3.29% from $226.73.

The CME Feeder Cattle Index for the seven days ended Thursday was $200.02 per cwt, off $1.00 for the day.  This compares with the Sep futures settlement Friday of $192.80, down $0.40.