Managed Money Holds Net Cattle Position Steady

Managed money held its long live cattle futures position nearly flat in the week ended Tuesday while Dec futures moved higher and total open interest declined.

The Commodity Futures Trading Commission Friday reported that for the latest reporting week, managed money’s net long position was 109,318 contracts, down only 834 contracts from 110,152 a week earlier.

During that same week, the Dec live cattle futures contract rose to a high of $168.87 from a low of $163.97 a week earlier.  However, the most recent low or $162.22 was set on Wednesday.

Total live cattle open interest during the latest reporting week declined 2,212 contracts, or 0.71%, to 308,878 from 311,090 as producers covered short positions in preparation for cash sales.

The CFTC reported producers held a net 145,152 short positions as of Tuesday, down 3,696 contracts, or 2.48%, from the previous week.  This is the second straight week of declines in net producer positions and put them at the lowest point since the week ended Sep. 30.

Wednesday’s price move completed a “flag” formation on daily charts, a short period in which prices move in the opposite direction of the main trend.  Flags are considered trend-confirmation patterns.

Since then, prices continued to rise into resistance at $170.00 per cwt on Thursday and Friday.  This double top at a round number record high may give the market pause.  Many analysts see prices breaching this number by spring, but predictions generally stay below $175.00.

 

MANAGED MONEY LONGS TO 3 ½-MONTH HIGH

 

While managed money was holding its live cattle position near steady, these investors were busily adding to their net long corn positions, taking them to a 3 ½-month high of 119,575 contracts, the highest net long position since the week ended Tuesday, July 15, when it was 125,018 contracts.

The latest net long position by managed money was up sharply from the previous week when it was 84,165 contracts, a gain of 35,410, or 42.1%.

Corn producers, on the other hand, sold more corn positions and acquired a net short position unrivaled since the week ended June 24 when it was 269,434 contracts.  The latest weekly increase in producer net short positions is the sixth straight and amounted to 7,831 contracts, or 3.00% from 261,347 a week earlier.

In the last six weeks, producers’ net short positions have increased 55,328 contracts, or 25.9%, from 213,850 the week ended Sep. 9.

During the latest CFTC week, the Dec futures contract basically moved sideways on daily price charts.  A minor dip on Monday was followed by a gain on Tuesday that brought the settlement of $3.56 a bushel close to the previous Tuesday’s close of $3.57.

Total corn open interest for the period declined 1,117 contracts, or 15.6%, to 1.296 million from 1.297 million.

 

BEEF CUTOUT DECLINE MAY PRESSURE CASH CATTLE

 

While cash cattle prices rocketed to $170 per cwt last week, a gain of about $6.00 from the week before, boxed beef prices declined, a move that could hobble further price advances, particularly this week.  The fact that cash values and the Dec contract are on par at round-number record highs after a neutral monthly cattle-on-feed report also may keep a lid on the market.

The USDA reported its choice cutout value Friday at $247.41 per cwt, down $2.02 for the day and down $1.75, or 0.70%, from $249.16 a week earlier.  Select was reported at $232.71, down $0.83 from Thursday and down $2.07, or 0.88%, from a week earlier.

However, those lower prices Friday increased sales as there were 184 loads of fabricated product sold into the spot market.