U.S. livestock: CME live cattle ease with equities

Chicago lean hogs rise

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

Chicago | Reuters — Chicago Mercantile Exchange live cattle futures weakened with equities on Tuesday, while hog futures advanced.

Moves in the cattle market have nearly mirrored those in equities since last week, traders said, with the global spread of the new coronavirus fueling sharp moves.

All three major U.S. stock market indexes dropped more than three per cent after the U.S. Fed made its first emergency rate cut since the 2008 financial crisis to shield the U.S. economy from the impact of the fast-spreading virus.

“Commodities have started to closely follow the outside markets, mainly the equities, which is causing a build in volatility,” said Karl Setzer, commodity risk analyst for AgriVisor.

April live cattle closed 0.05 cent lower at 110.1 cents/lb. (all figures US$). June futures, the second-most-active contract, fell 0.6 cent, to 103.375 cents/lb.

April feeder cattle ended down 1.275 cents at 133.775 cents/lb. On Friday, the contract touched its lowest price since September.

April lean hogs, the most-active contract, settled 0.75 cent higher at 63.55 cents/lb. June hog futures rose 1.05 cents, to 78.075 cents.

Lean hog futures ended higher on bargain buying and hopes for increased Chinese purchases of U.S. pork, analysts said.

The coronavirus outbreak clouded the outlook for Chinese demand, after Beijing pledged to buy more U.S. farm goods as part of an initial trade deal signed in January. But some workers in China who stayed home because of the outbreak have since returned to work at ports, where containers of imported meat are received.

“We’re starting to see some of the port congestion start to clear,” an analyst said.

Traders are hoping for accelerated Chinese buying of U.S. pork to reduce large U.S. supplies. China needs to increase pork imports from around the world after a fatal pig disease, African swine fever, decimated its herd.

Brazilian food processor BRF SA reported that strong sales to China helped it to record its first annual profit in four years. Yet the world’s largest chicken exporter still sees volatility in 2020 from the effects of the coronavirus.

U.S. meat companies slaughtered an estimated 495,000 hogs on Tuesday, steady from a week earlier and up from 475,000 a year ago, according to the U.S. Department of Agriculture.

Cash cutout prices were 24 cents/cwt higher for carcasses but $1.01 lower for hams, the agency said.

— Tom Polansek reports on agriculture and ag commodities for Reuters from Chicago.

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