Chicago | Reuters — U.S. live and feeder cattle futures ended mixed on Friday, with nearby contracts pressured by coronavirus-related disruptions at packing plants, while hopes for a reopening of the economy lifted deferred contracts.
Actively traded June live cattle ended higher on the week, for a second straight week, after seven consecutive weeks of decline.
“All the bad news has been digested. We know that we’re closing plants,” said Jeff French, analyst at Top Third Ag Marketing.
Hog futures firmed on position squaring ahead of the weekend, but ended the week down more than 10 per cent.
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Traders are hopeful federal aid to the agriculture sector will provide some support for livestock. U.S. Agriculture Secretary Sonny Perdue was expected to announce details of an relief package during a Friday evening press briefing that could include beef and pork purchases.
June live cattle futures dropped to a $24 discount to cash market prices at the start of the week amid worries about declining slaughter capacity that could further pressure the market, according to analysts (all figures US$).
Processors including JBS USA and National Beef Packing Co. have closed beef plants due to the coronavirus.
The coronavirus has also shuttered pork plants run by Smithfield and Tyson Foods.
“Right now, we’re producing too many pigs for our demand, and the lack of export demand,” said French. “China’s been showing up every week, but they could be taking a lot more pork.”
June live cattle fell 0.175 cent to 86.3 cents/lb. at the Chicago Mercantile Exchange, up 2.3 per cent from the week prior. May feeder cattle futures climbed 0.8 cent to 119.275 cents/lb., up 0.3 per cent on the week.
CME June lean hog futures added 0.55 cent to 43.725 cents/lb., down 10.2 per cent for the week.
Traders continued to focus on shutdowns of pork and beef plants. Pork producers are more sensitive than cattle ranchers to disruptions at processing plants, traders said, as hogs reach slaughter weight more quickly and lose value if they grow too heavy.
Smithfield Foods, the world’s biggest pork processor, said Wednesday that it would shutter two U.S. plants that process bacon and ham, after closing a separate hog slaughterhouse because of a coronavirus outbreak among employees.
Packers slaughtered an estimated 444,000 hogs on Thursday, down from 472,000 last week and 480,00 a year ago, according to the U.S. Department of Agriculture. They slaughtered 92,000 cattle, down from 99,000 a week ago and 122,000 a year earlier.
— Reporting for Reuters by Christopher Walljasper in Chicago; additional reporting by Karl Plume.
