U.S. livestock: Cattle futures jump in end-of-month, -quarter rebound

Lean hog futures up in most months

CME June 2020 live cattle with 20-, 50- and 100-day moving averages. (Barchart)

Chicago | Reuters — U.S. live cattle futures rallied by as much as the daily three-cent trading limit on Tuesday in an end-of-month and end-of-quarter profit-taking bounce following a steep drop fueled by concerns about the fast-spreading coronavirus and its economic impact.

The recent dive in prices as governments imposed stay-at-home orders and restrictions on travel have dragged cattle futures to levels well below cash market values, leaving the market poised for a rebound.

Lean hog futures were also higher in most months, with only the lightly-traded nearby April and May contracts posting declines on the day.

“Today’s action was end-of-month and end-of-quarter position squaring. We’ve come down a long way,” said Alan Brugler, president of Brugler Marketing and Management.

Cash beef prices and beef packer margins have dropped from recent highs as the market reacts to the longer term impact of prolonged coronavirus restrictions.

Cash cattle markets have provided little direction this week as packer bids at feedlot cattle markets in the U.S. Plains remain elusive after cattle traded at $117-$120/cwt last week (all figures US$).

Livestock traders, meanwhile, are watching for any potential disruptions to the food supply chain from coronavirus infections. Traders worry that shutdowns could back up supplies of livestock by removing markets for the animals.

The Chicago Mercantile Exchange April contract gained 2.625 cents, to 101.825 cents/lb., while actively-traded June futures finished up three cents at 92.075 cents. Limits for live cattle will expand to 4.5 cents for Wednesday’s trading session after the limit-up close.

CME May feeder cattle futures settled two cents higher at 122.9 cents/lb.

CME April lean hog futures fell 1.75 cents to 52.2 cents/lb. Most-active June lean hogs fell to a life-of-contract low but ended up 0.55 cent at 60.325 cents.

— Karl Plume reports on agriculture and ag commodities for Reuters from Chicago.

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