Chicago | Reuters –– U.S. live cattle futures fell on Tuesday, with the benchmark April contract touching its lowest since late September on falling cash cattle prices and worries about the impact of the coronavirus outbreak in China, traders said.
Cash cattle traded lightly in Kansas and Nebraska at $119-$120 per cwt, traders said, down $1-$2 from the bulk of last week’s trade at $121/cwt (all figures US$).
“It’s never a good sign when you trade lower cattle on a Tuesday. Historically, when you do that, the early-week trade is higher compared to the balance of the week,” said Jeff French, an analyst with Top Third Ag Marketing in Chicago.
The benchmark April live cattle futures contract on the Chicago Mercantile Exchange (CME) settled down 1.5 cents at 117.175 cents/lb. after dipping to 117.075, its lowest since Sept. 26.
CME March feeder cattle futures fell 1.025 cents to settle at 134.675 cents/lb.
Cattle markets were also rattled by worries about the coronavirus. The outbreak in China may be over by April, China’s senior medical adviser said, but deaths surpassed 1,000 and the World Health Organization (WHO) warned of a global threat potentially worse than terrorism.
“There is a ton of uncertainty out here with this coronavirus,” said French, adding, “I know China doesn’t directly impact our beef market, but it has the funds spooked.”
Managed commodity funds held a net long position in CBOT live cattle futures of just over 51,000 contracts as of Feb. 4, according to the latest Commodity Futures Trading Commission data, leaving the market open to bouts of long liquidation.
CME lean hog futures followed the weak trend, pressured by worries about U.S. pork exports.
“With China pretty much closed down, do we get to off-load all the pork that’s en route to China? That’s a big question,” French said. However, he noted, “We are still very cheap, (and) there is still a massive pork shortage in the world.”
Benchmark April lean hog futures on the Chicago Mercantile Exchange (CME) settled down 0.85 cent at 64.225 cents/lb., holding well above the contract low set last week at 61 cents.
The U.S. pork cutout fell by $1.37 on Tuesday afternoon, but cash hog prices in the closely watched Iowa and southern Minnesota market rose by 14 cents, according to USDA.
— Julie Ingwersen is a Reuters commodities correspondent in Chicago.