Managed Money Cuts Long Positions

Managed money reduced its net long position in live cattle futures during the week ended Tuesday, even though producers almost kept their net short position intact, the Commodity Futures Trading Commission said.

During the latest reporting week, the CFTC reported Friday that managed money (a proxy for large traders) had reduced its net long position to 108,981 contracts from 110,609 the previous week, a decline of 1,628, or 1.47%.  The move keeps managed money in a three-month flat spot.

At the same time, producers decreased their net short position, by only 240 contracts to 153,146 from 153,386 in the previous week.

During the week ended Tuesday, the most-active Feb live cattle contract was in the throes of its current decline, moving to a low on Tuesday of $167.85 per cwt from a high of $170.40 the previous Tuesday.  The contract has continued lower since Tuesday, closing Friday at $164.45.

Live cattle open interest declined 4,296 contracts to 321,117 from 325,413 for a 1.32% dip.




While managed money was holding its live cattle positions near steady, the investors were reducing their corn holdings, reversing a trend that began with the week ended Oct. 14.  The latest week’s cut in long positions wasn’t great, dipping to 186,611 contracts from a six-month-high 194,854 the previous week, a decline of 8,243, or 4.23%.

Producers also reversed position, cutting their net short positions by 12,147 contracts, or 3.26%, to 360,932 contracts from 373,079, the previous week.  The decline ended an 11-week period in which producers continually extended their net short positions – essentially during the harvest.

During the latest reporting week, the corn market was establishing its current consolidation phase, holding within the boundaries of the Nov. 20 low of $3.62 ½ a bushel and the Nov. 21 high of $3.81 1/2.

Support was taken from the US Gulf market where FOB prices are competitive in world markets, increasing the chances for continued growth in export shipments.  Pressure came from abundant supplies and declines in US gasoline prices.

During the latest CFTC reporting week, total corn open interest fell 29,340 contracts, or 2.40%, to 1.192 million from 1.222 million the previous week.




Stung by selling from chart-based traders, lower feeder cattle prices and lower live cattle futures prices, cash cattle traded sharply lower last week.  Cattle changed hands $5 to $6 per cwt lower on a live basis at $166 to $168 and $3 lower at $264 to $265 on a dressed basis.

Many traders feel the market has adopted a bearish tone for the time being.  Some also feel that this year’s sharply higher prices when compared with a year ago will lead to steep, short-term declines, and the dip in managed money’s market exposure may be a move toward the sidelines.

The USDA’s beef cutout value took it on the chin Friday, extending weekly losses and adding pressure to the futures market, even though the move is seasonal as buying interest for ribs and loins declines.

The USDA’s choice beef cutout value was down $1.88 per cwt from Thursday at $252.54 and was down $4.86, or 1.89%, from $257.40 a week ago.  The select cutout Friday, at $236.69 was down $3.57 from Thursday and was off $9.16, or 3.73%, from $245.85 a week ago.

There were 141 fabricated loads sold into the spot market Friday.

The CME Feeder Cattle Index for the seven days ended Thursday was up $0.63 at $244.82 per cwt, compared with the Jan contract’s Friday settlement of $234.87, down $1.07.