Managed Money Trims Long Cattle Positions

Managed money tentatively cut its net long positions in live cattle futures during the week ended Tuesday as producers covered short positions, the Commodity Futures Trading Commission reported in its weekly Commitments Of Traders report Friday.

During the latest reporting week managed money, or large speculators, trimmed their net long position to 109,936 contracts from 112,270 the previous week, ending a three-week position gain.

At the same time, producers cut their net short positions to 146,374 contracts from 149,968 the previous week.

During the week, prices for various contract months were mixed, with the settlement price for nearby Oct declining $0.75 per cwt to $155.45 from $156.20 while the settlement for the April 2015 position rose $2.10 during the week to settle at $159.67 on Tuesday versus $157.57 the previous Tuesday.

Sources say the slow leak in nearby futures may be a loss of confidence in cash markets as beef prices sag and packer margins suffer.  Estimated slaughter last week was about steady with the previous week at 572,000 head after a fairly strong Saturday kill of 17,000.  The previous week, the total kill was 571,000 head after a Saturday kill of 9,000.

However, last week’s cash cattle market was virtually non-existent as packer buyers failed to provide acceptable bids to cattle owners.  Sources say packers may be willing to dig into October contracts this week rather than buy fresh kill inventory at last week’s asking prices.

That indicates packer bookings may be thin.  If so, beef cutout values from the USDA may be in for more declines, and the lack of cash cattle business last week may swell feedlot showlists this week and undermine their footing in price negotiations this week.

But the increase in prices for deferred futures and the rise in managed money interest in live cattle reinforces views that cattle prices likely will turn higher once the current slug of fed cattle is worked through the system.




Just as managed money trimmed its interest in cattle futures, these speculators also faded their positions in corn.  The CFTC reported managed money ended the latest reporting week with a net long position of 82,872 contracts, compared with 87,607 the previous week.

At the same time, producers continued to lose confidence in the market, extending their short positions to 232,849 contracts from 226,641 the previous week.  It was the second straight week in which producers extended short positions, possibly a result of the phenomenal yield results that keep pouring in from the fields.

Producers haven’t been that short since the week ended Aug. 19 when they were net short by 239,186 contracts.

Sources say nearly ideal weather conditions pose no threat to the harvest and the normal maturation of crops.  Some are wondering just where the bottom will be.

The biggest problem currently appears to be logistics with barge, rail and truck rates rising at a time when the vast majority of this year’s corn and soybean production is still in the fields.




Fridays quarterly USDA Hogs and Pigs report showed a rapid growth in the US herd, indicating producers were getting a handle on the PED virus.  Historically high pork prices also provided incentive to add sows and production to the herds, sources said.

All hogs and pigs Sep. 1 was reported at 65.4 million head, down 2% from last year’s 66.9 million but up 6% from the June 1 inventory of 61.6 million.

The market hog inventory, at 59.4 million head, was down 3% from last year’s 61.1 million but up 7% from June 1 when it was 55.7 million.