Chicago | Reuters — U.S. live cattle futures surged by their daily trading limits for a second straight session on Thursday on soaring beef prices and concerns about meat shortages because of recent packing plant closures due to the coronavirus.
Shuttered slaughterhouses across North America due to the pandemic have left ranchers nowhere to ship their animals, and major outlets such as fast-food chain Wendy’s and retailers including Kroger and Costco have limited sales of some meat items.
Wholesale boxed beef prices have surged to historic highs, taking with them meat packer margins, which have also swelled.
The price of cattle in the cash market has rebounded after U.S. President Donald Trump on Wednesday said he had urged the Department of Justice to look into allegations that the meatpacking industry broke antitrust law.
Cash cattle traded earlier this week at $95/cwt, but prices paid by at least one large packer have since jumped to $110 in the southern Plains (all figures US$).
“You can’t turn on the news today without hearing about meat shortages and all-time-high prices,” said Jeff French, analyst with Top Third Ag Marketing. “The packers got the call.”
Chicago Mercantile Exchange (CME) June live cattle futures jumped to 93.975 cents/lb., rising by an expanded 4.5-cent daily limit following Wednesday’s three-cent limit gain. The daily limit will remain at 4.5 cents on Friday, the CME said.
Feeder cattle futures followed live cattle higher, with the actively traded August contract ending up 5.4 cents at 138.15 cents/lb.
Lean hog futures retreated on Thursday in a profit-taking setback following a recent climb to five-week highs.
CME June hogs settled 1.675 cents lower at 63.9 cents/lb.
The hog market remains supported by expectations that more packing plants shuttered by the coronavirus will soon reopen, although a lingering backup of animals in need of processing has hung over the market.
Trump has declared meat processing essential, but some workers have said they are afraid to return, even with safety measures and limited production.
Tyson Foods said this week it would resume limited production at its largest U.S. pork plant in Waterloo, Iowa, more than two weeks after closing the facility because of a coronavirus outbreak among workers.
— Karl Plume reports on agriculture and ag commodities for Reuters from Chicago.