U.S. livestock: CME cattle dive as coronavirus slams global markets

Technical buying limits hogs' losses

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

Chicago | Reuters — Chicago Mercantile Exchange live cattle futures extended a steep sell-off on Friday on growing worries that the spread of coronavirus would dent global economic growth and could tip the world economy into recession.

Global stocks and oil prices fell sharply as traders fretted over the economic toll of the virus that has infected over 82,000 people in nearly 50 countries and killed more than 2,700.

The S+P 500 was down for a seventh straight day and the benchmark index suffered its biggest weekly drop since the 2008 global financial crisis, stoking worries among cattle traders about reduced consumer beef purchases and slow restaurant traffic.

“Most of the pressure was in the front month futures on concern about near term demand disruptions, even as we are coming into a much better demand season as the weather warms up and people start bringing their grills out,” said Matthew Wiegand, commodity broker for FuturesOne.

CME April live cattle fell by as much as three cents on Friday, the daily trading limit, and notched a contract low of 107.475 cents/lb. (all figures US$). The actively-traded contract ended down 2.9 cents at 107.575 cents/lb. June futures, the second next most active contract, also posted a life-of-contract low.

Feeder cattle futures neared limit losses early in the session as live cattle and outside markets tumbled. But feeders bounced to close well off session lows, supported by technical buying, short covering and bargain buying ahead of the weekend.

Still, April feeders ended down 1.375 cents at 132.7 cents/lb., the lowest close since mid-September.

Lean hog futures posted modest declines on coronavirus worries, although losses were limited by technical buying, bargain buying and short covering.

Hog traders are also watching for any sign of accelerated U.S. agricultural purchases by China as part of the Phase One trade deal. Under a recently announced program, Chinese importers can begin registering with the government for tariff waivers beginning next week.

CME April lean hogs, the most active contract, settled 0.275 cent lower at 62.275 cents/lb., while June futures were down 0.825 cent at 77.225 cents.

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

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