U.S. livestock: Cattle set multi-month lows as virus fears hit markets

CME April 2020 live cattle with 20-day moving average. (Barchart)

Chicago | Reuters — U.S. live and feeder cattle futures touched their lowest prices in months on Friday as traders booked profits amid fears about the spread of a new virus from China.

Broad selling also hit hog futures, along with equities and crude oil as investors moved into safe-haven assets.

Developments in the spread of the coronavirus will likely continue to direct cattle futures on Monday, said Rich Nelson, chief strategist for Illinois-based commodities broker Allendale.

Concerns increased as U.S. health officials confirmed a second U.S. case of the coronavirus and France confirmed its first three cases, while Chinese authorities sought to contain an outbreak that has killed at least 41 people in the country and infected about 1,000.

“I don’t know how much pressure we should have seen due to the coronavirus but based on psychology, it fits,” Nelson said.

April live cattle futures reached their lowest price since Oct. 31 before ending up 0.125 cent at 124.3 cents/lb. at the Chicago Mercantile Exchange (all figures US$). CME March feeder cattle futures dropped 0.85 cent to 139.675 cents/lb. and touched their lowest level since Nov. 22.

The U.S. Department of Agriculture, in a monthly report issued after the close of trading, said the nation had 12 million head of cattle on feed for slaughter as of Jan. 1, up 2.3 per cent from a year earlier. A Reuters poll of 10 analysts had projected an increase of 2.2 per cent.

USDA said 1.83 million head were placed in feedlots during December, up 3.5 per cent from the previous year. Analysts were expecting an increase of 3.4 per cent.

The data was “neutral across the board,” Nelson said.

Uncertainty about Chinese demand for U.S. meat continues to hang over the livestock markets.

Beijing pledged to increase imports of U.S. agricultural products in a trade deal signed last week that is meant to reduce tensions after nearly two years of a tit-for-tat tariff war. Traders are unsure about the timing and scale of future Chinese purchases, though.

China needs to further boost meat imports after an outbreak of a fatal pig disease, African swine fever, decimated its herd.

Weekly U.S. pork shipments to China from Jan. 10-16 were 16,917 tonnes, the biggest reported since February 2019, the U.S. Department of Agriculture said. Net sales to China, the world’s largest pork consumer, were relatively modest at 2,996 tonnes.

CME February lean hog futures fell 1.275 cents to 67.225 cents/lb. The most-active April contract ended down 1.9 cents at 73.45 cents, a day after reaching a two-week high.

— Reporting for Reuters by Tom Polansek in Chicago.

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