Cattle Current Daily—Oct. 15. 2021

Cattle Current Daily—Oct. 15. 2021

Negotiated cash fed cattle trade was limited on moderate demand in Nebraska and the western Corn Belt through Thursday afternoon, according to the Agricultural Marketing Service. Live sales were steady to $2 higher in the western Corn Belt at $124/cwt., while dressed prices were steady at $196. There were too few to trend in Nebraska, where prices the previous day were steady to $2 higher at $124; steady in the beef at $196.

Trade in the Southern Plains was mostly inactive on light demand with too few transactions to trend. On Wednesday, live prices were steady at $124.

Higher outside markets and the slight increase in some regional cash prices helped draw more buying interest to Cattle futures Thursday.

Live Cattle futures closed an average of 78¢ higher (35¢ higher toward the back to $1.30 higher toward the front).

Feeder Cattle futures closed an average of 84¢ higher.

Choice boxed beef cutout value was 30¢ higher Thursday afternoon at $280.32/cwt. Select was $1.98 higher at $260.68.

Corn futures closed mostly 1¢ to 3¢ higher.

Soybean futures closed 5¢ to 11¢ higher through Sep ’22 and then mainly 1¢ lower.

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Major U.S. financial indices closed sharply higher Thursday, fueled by blue-chip quarterly earnings reports beating expectations. The continued rally in oil added spark, as did fewer weekly initial jobless claims than expected.

Weekly unemployment insurance claims for the week ending Oct. 9 numbered 293,000, according to the U.S. Department of Labor. That was 36,000 less than the previous week and the lowest level since March 14 of last year when they tallied 256,000.

The Dow Jones Industrial Average closed 534 points higher. The S&P 500 closed 74 points higher. The NASDAQ was up 251 points.

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Open interest in Cattle futures continues to dwindle.

For recent perspective, Live Cattle open interest declined from a high of 314,114 contracts toward the beginning of September to a low of 289,222 Sept. 21 and then bounced as high as 292,326 before the end of the month. So far in October, Live Cattle open interest ranges from a high of 292,386 contracts Oct. 4 to a low of 281,581 Oct. 13.

Matthew Diersen, risk and business management specialist in the Ness School of Management and Economics at South Dakota State University provides some insight in the latest issue of In the Cattle Markets, published by the Livestock Marketing Information Center. He uses Live Cattle futures settlement Oct. 5 and the Commitment of Traders (COT) report from Oct. 8.

“In Live Cattle, the open interest held by producers (very large feedlots and processors) has been declining by those with short positions and increasing by those with long positions. The opposite has been happening with managed money; with more shorts and fewer longs,” Diersen says. “In Feeder Cattle, the largest share of open interest is held by managed money. In recent weeks they have reduced long positions and added short positions.”

Diersen explains many commodity indexes include Live Cattle and some include Feeder Cattle.

“The COT includes a supplement with a breakdown of index traders that includes futures and options. For Live Cattle, about one-third of open interest is long positions of index traders. Generally, these would be fund managers that buy and hold futures, then repeatedly roll to new contracts, always maintaining some exposure to cattle. Their net exposure is about opposite that of commercial traders at this time,” he says. “For Feeder Cattle, the contracts held by index traders is much smaller compared to Live Cattle contracts and the balance is more evenly split between long and short positions, though they are still net long.”

2021-10-14T18:36:52-06:00

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