Managed Money Sells Cattle As Futures Rise

Managed money traders further liquidated live cattle futures positions during the week ended Tuesday, even though futures prices were rising, said the Commodity Futures Trading Commission.

The CFTC’s weekly Commitments of Traders Report showed managed money with a net long position of 50,496 live cattle contracts, down 1,729, or 3.31%, from 52,225 the previous week and the lowest net long position in more than a year.

At the same time, the nearby futures contracts were rising.  The spot contract changed from the Feb delivery month to the Apr during the latest reporting week, but the Apr position rose to Monday’s high of $153.85 per cwt from the previous Tuesday’s low of $145.50.  The market dipped on Tuesday, Mar 3, but resumed its upward climb on Wednesday.

The resulting climb of the Apr contract filled the gap on daily front-month charts left by the transition from Feb to Apr.  However, Apr appeared to run into resistance at the $154.65 level on Thursday and Friday.

Total cattle open interest during the latest week declined 47,077 contracts, or 3.63%, to 1.249 million from 1.296 million the previous week.

Farnsfield Research says that when open interest declines while prices rise it means existing long and short positions are being liquidated more aggressively than new positions are being established.  And, since prices are on the rise, it usually indicates short positions are being covered more aggressively than long positions are being sold, rendering the market weak since new demand is not the driver.

Yet the net short position of producers declined only slightly during the latest CFTC reporting week to 91,000 contracts from 92,461 the previous week, a difference of 1,461, or 1.58%.




During the same reporting week, managed money cut its net long position in corn futures to 34,401 contracts from 62,886 the previous week, a fall of 28,405, or 45.3%, to its lowest point in more than a year, and its 11th straight weekly decline.

During that same week, the CFTC said corn producers and others who handle the grain trimmed their total net short positions to 262,494 contracts from 268,649, for a decline of 6,155, or 2.29%.

Nearby futures prices, however, remained stuck in a narrow sideways pennant pattern on daily charts, clustered loosely around $3.83 a bushel for the May contract.

Total open interest during the latest reporting week declined only 306 contracts, or 0.13%, to 243,159 contracts from 243,465.

Market analysts said last week that many corn traders are waiting for Tuesday’s release of USDA Crop Production Report to give them some sense of expected planted acres and forecast yields – assuming normal weather conditions throughout the growing season.




Cash cattle markets traded about $3 per cwt higher last week at $160 to $162 per cwt on a live basis.  In Nebraska’s dressed market, cattle traded at $256 to $257 per cwt, a $3 to $6 increase from the previous week.

Beef prices were lower for the week, after a sideways, mixed trend in daily markets.  Friday, the USDA’s choice cutout was reported at $248.48 per cwt, down $0.72 on the day, and down $0.25 from last week’s $248.73.

The USDA’s select cutout was reported Friday at $244.39, down $2.19 from Thursday and down $1.18 from the previous Friday’s $245.57.

The choice/select spread ended the week at $4.09, up from the previous week’s $1.80 in what could be the start of a seasonal widening

The CME Feeder Cattle Index for the seven days ended Thursday was up $1.00 per cwt to $207.66, compared with the Mar futures contract, which settled Friday up $3.35 per cwt at $209.72.