Managed Money Cuts Long Cattle Position

Managed money decreased its net long position in live cattle futures to the lowest point in three months during the week ended Tuesday, according to the Commodity Futures Trading Commission.

The Commission’s weekly Commitments of Traders report showed that managed money, a proxy for large speculators, lowered their net long live cattle positions by 8,491 contracts during the week to 100,490 from 108,981, the lowest since the week ended Sep 2 when it had a net long position of 94,121 contracts.

The report showed managed money had made the adjustment mostly through long liquidation.  During the week, these speculators had cut long positions by 10,204 while reducing their short holdings by only 1,713.

During the same week, producers reduced their net short positions by 5,107 contracts to 148,039 positions from 153,146 the previous week.  Producers did this mostly by covering short positions as they filled 6,411 short positions while liquidating only 1,304 longs.

During the latest reporting week, long liquidation seemed to hold sway over the market as prices fell sharply.  Technical pressure was added to fears of lower beef prices.  The most-active Feb contract went from a high on Tuesday, Dec. 2, of $170.10 per cwt to a low Tuesday, Dec. 9, of $160.75, a drop of $9.35, or 5.50%.

The market moved sideways in the last half of last week.

However, total open interest increased during the latest reporting week to 321,117 contracts from 296,753 the previous week, a boost of 24,364, or 8.21%.  Traders remained long-term bullish, while losing confidence in the short term after the November USDA Cattle-on-Feed report showed more cattle in the feedlots than a year earlier.




Managed money really got into corn during the latest reporting week.  The CFTC reported that these speculators ended the week net long 216,801 contracts, a gain of 30,190, or 16.2%, from 186,611 the previous week.  Their new long position is the largest since the week ended May 22 when it was 214,504.

Broken down, the CFTC said managed money increased its net long position through a combination of short covering and the expansion of new long positions.  These speculators covered 19,825 short positions and took on 10,365 new long positions during the week.

At the same time, producers increased their net short positions to 400,712 contracts, the largest since the week ended May 14 when it was 437,144.  For the week, producers reversed last week’s short-covering activities and resumed a pattern of extended short positions going back to mid-September.

The CFTC said producers did nearly all of the increase in short positions by extending short sales.  They expanded short positions by 38,143 contracts while liquidating only 1,637 long contracts.

During the latest reporting week, the March contract rose modestly to a high on Tuesday, Dec. 9, of $3.83 ¾ a bushel from a low of $3.67 ½, a gain of $0.16 ¼ cents, or 4.42%.

Total open interest during the week rose 16,898 contracts to 1.210 million from 1.193 million, a gain of 1.427%.




Cash cattle prices in the Plains last week declined again as traders feared a drop in beef prices now that the holiday buying is over would spill over into cattle.  Supplies also were said to be ample for packer needs.  Cattle traded at mostly $164 per cwt on a live basis, down about $4 while dressed trade, at $255 to $257, was down $8 to $10.

The CME Feeder Cattle Index Thursday was $236.90 per cwt, down $2.87 but still $11.30 below Friday’s limit-down Jan futures close of $225.60.