Live cattle open interest declined sharply during the week ended Tuesday while live cattle futures prices were moving higher, showing the rally in futures was driven mostly by short covering, market analysis showed.
CME Group data showed total live cattle open interest as of Tuesday was 335,533 contracts, down 21,109, or 5.92%, from 356,642 the week before. This was while the most-active Dec contract was moving higher, revealing that short positions were being covered more aggressively than new long positions were being added.
Large commodity investment funds, known as managed money, extended their collective net short live cattle futures position in the week ended Tuesday, according to Commodity Futures Trading Commission data.
The information came from the CFTC’s weekly Commitments of Traders report Friday, and showed that managed money had either reduced their net long cattle position or increased their net short position for the last seven straight weeks.
Managed money’s new net short cattle position totaled 10,478 contracts, up 704, or 7.20%, from 9,774 the previous Tuesday. It was their largest net short position in more than a year.
At the same time, commercial traders, those who own the cattle and theoretically could make or take delivery of a futures contract, reduced their collective net short position to 92,142 contracts, down 1,269, or 1.36%, from 93,411 the previous Tuesday.
The CFTC said managed money arrived at their new cattle position by adding 884 long positions, 1,588 short positions and unwinding 11,270 spread positions. This left them holding 16.7% of total long open interest, 19.8% of total short open interest and 19.1% of total spread open interest.
Commercial traders, meanwhile, got to their new short cattle position by liquidating 1,524 long positions and covering 2,793 short positions, leaving them in control of 13.8% of total long open interest and 41.3% of total short open interest.
CME Group data also showed that the most-active Dec contract rose during the week to settle Tuesday at $105.30 per cwt from $101.22. The contract had a slower, more uneven, rise for the rest of the week.
FUNDS GET SHORTER CORN FUTURES
During the latest CFTC reporting week, managed money took on an even shorter position, ending with a collective net short position of 176,643 contracts, up 33,176, or 23.1%, from 143,467 the week before and their shortest since May 14 when it was short by 298,551.
Commercials, meanwhile, cut their net short position to 181,051 contracts from 202,311, a dip of 21,260, or 10.5%. It was their lowest net short position since May 14 when it was 21,856 contracts.
The CFTC said managed money arrived at its new position by liquidating 11,881 long positions, adding 21,295 short positions and putting on 5,271 spread positions. This left them in control of 9.9% of total long open interest, 20.7% of total short open interest and 11.2% of total spread open interest.
Total open interest was 1.625 million, versus 1.626 million.
CATTLE, BEEF RECAP
Cash cattle trade was reported last week at $100 to $104 per cwt, up $1 from the previous week. Dressed-basis trade last week was at $160 to $165, up $1 to $3.
The USDA choice cutout Friday was down $1.20 per cwt at $216.97, while select was off $0.44 at $191.72. The choice/select spread narrowed to $25.25 from $26.01 with 67 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Thursday was $138.53 per cwt, up $1.24 from the previous day. This compares with Friday’s Sep contract settlement of $140.32, up $0.37, and the Oct settlement of $139.20, up $0.27.