Managed Money Warms To Cattle

Managed money got back into live cattle in a big way during the latest reporting week, according to the Commodity Futures Trading Commission’s weekly Commitment Of Traders Report.

The net long position of managed money rose 14,327 contracts, or 14.0%, to 116,714 from 102,387 in the week ended Tuesday.  At the same time, the net short positions of producers increased 9,491 contracts, or 5.97%, to 168,446 from 158,955.

During that week, Oct live cattle futures prices dipped from a two-day challenge to the contract high made the week before and then tried to rally.  Managed money was getting into cattle futures as investments in other areas had less appeal and continued tight supplies made deferred cattle futures a little more attractive.

Producers, increasingly convinced the market had made its summer top, saw the rally attempt last week as a head fake that afforded them another selling opportunity.  Further advances in producer short positions are possible in the next CFTC report as prices dropped further and cemented ideas of a late summer top.

During the same CFTC reporting week, total live cattle open interest fell 19,002 contracts, or 5.53%, to 324,362 from 343,364.




During the latest CFTC reporting week, corn traders made similar, if less aggressive, moves since nearly ideal weather forecasts made a continued bearish price outlook more certain.

The CFTC reported that managed money increased its net long position by 6,887 contracts, or 7.86%, to 94,518 from 87,631.

During the reporting week, producers decreased their net short corn positions by 46,926 contracts, or 17.13%, to 226,945 from 273,871, the CFTC said.

During that week, the Dec futures contract moved lower and then stabilized amid slightly drier weather forecasts.  Since then, the market made a short rally attempt, only to be thwarted by renewed forecasts for more Midwestern and Delta rain.

Total corn open interest during the CFTC reporting week rose only 1,451 contacts, or 0.11%, to 1.372 million from 1.370 million, showing indecision among traders.




Tuesday’s monthly World Agricultural Supply and Demand and Crop Production reports loom large for the industry as they are expected to lean toward larger crops.  However, in a sense, the industry is already is moving past them.

Many expect the large crops to get larger as rains pelt the Midwest and Delta, helping corn to fill and soybeans to pollinate and set pods.  Weekly crop condition reports continue to point to near-ideal conditions and record production for both crops.

Most do not expect the USDA to have the crop’s whole potential built into this report, even if they do expect a bearish leaning.

The average estimate for corn production is 14.253 billion bushels, compared with the July estimate of 13.860 million and last year’s end result of 13.925 billion.

Soybean production is estimated at 3.823 billion bushels, compared with the July estimate of 3.800 billion and the 2013 total of 3.289 billion.