Managed Money, Producers Lose Confidence In Cattle

Managed money and producers both appeared to lose confidence in the cattle market’s ability to transcend $170-per-cwt resistance for long as both got slightly shorter in the latest reporting week.

The Commodity Futures Trading Commission Friday reported that for the week ended Tuesday, managed money, a proxy for large speculators, reduced its net long position by 514 contracts, or 0.47%, to 108,804 positions from 109,318 the previous week.

During the same week, producers extended their short positions by 1,826 contracts, or 1.26%, to 146,978 positions from 145,152 the previous reporting week.

A daily chart of the spot delivery month in live cattle futures showed that lack of confidence when it changed over to Dec from Oct as the latter expired on Friday.  Oct flamed out with a short position-evening burst on Thursday to $171.35 before settling at $170.50.

That ushered in the Dec contract as the nearby position with a Friday high of $167.70 and a settlement of $166.05.  The chart gap will want to be filled eventually, but cash markets also traded $2 to $3 per cwt lower on a live basis at $167 to $168 on a live basis.

During the latest reporting week, the Dec contract hit a new high of $169.70 on Friday, its third recent test of the $170.00 barrier.  The contract subsequently slunk lower through the rest of last week.

Interestingly, total open interest increased during the reporting week to 314,266 contracts, up 5,388, or 1.74%, from 308,878 the previous week.




During the latest week, the CFTC reported that managed money had increased its net long position in corn to 139,064 contracts, its highest in five months.  The week ended June 17, managed money’s net long position was 147,749 contracts.

The latest total also is up 19,489, or 16.3%, from 119,575 the previous week, the CFTC said.

During the same week, producers increased their net short position to 296,348 contracts, also its largest in five months.  During the week ended June 17, producers’ net short positions totaled 301,858 contracts.

In the latest reporting week, producers’ net short positions increased 27,170 contracts, or 10.1%, from 269,178.

As managed money was extending its net long position, the Dec corn futures contract was rising in price.  The contract rose to a high of $3.71 ¾ a bushel on Oct. 28 from a low of $3.47 the previous week, a gain of 7.13%.

Total open interest declined during the latest CFTC week to 1.272 million contracts from 1.296 million the previous week, a gain of 24,000, or 1.85%.




Boxed beef markets seemed to lose favor with buyers late last week with declines on Thursday and Friday and a narrowing of the choice/select spread.  The USDA reported light demand and light-to-moderate offerings with rib cuts steady and end cuts weak.

The USDA reported its choice beef cutout at $251.20 per cwt, down $2.15 from Thursday, and its select cutout at $238.63, down $0.78.  The choice/select spread narrowed to $12.56 from $13.94 on Thursday.

However, late-week losses in wholesale beef prices did not give up gains made through Wednesday.  For the week, the choice cutout was up $3.79, or 1.53%.  The select cutout gained $5.92, or 2.54%, for the week.

Friday’s beef market also showed slow sales into the spot market with only 85 loads of fabricated product sold.