CattleFax: Where’s the US Cattle Open Interest Gone?09 February 2015
ANALYSIS – Speculators have left the US cattle future market, leaving ranchers far more exposed on a hedge basis, the US cattle industry was told last week.
Speaking at the NCBA cattle industry convention in San Antonio, Texas, CattleFax CEO Randy Blach said open interest is down 120,000 in the cattle futures market compared to last year.
“We aren’t going to bring that money back in any time soon,” he said as part of the CattleFax Outlook.
Attendees heard that outside interest is important to “lay risk off”, but on the other hand, Mr Blach attributed less speculation to the strong basis that ranchers have today.
Around 65,000 fewer long funds are in the market now, and this is because global commodities have peaked.
On why traders have left the market, he said: “They’re looking at all those things going on – the dollar, our positioning, and competitive meats and saying 'there is not as big a bet out there as there was two years ago.'
“We’ve probably got more exposure than we’ve had for quite some time, and that’s a little bit of a scary proposition,” Mr Blach said.