Chicago | Reuters — U.S. livestock futures tumbled on Monday on worries about declining U.S. meat processing capacity after Smithfield Foods announced Sunday it would indefinitely shut one of its pork plants due to novel coronavirus infections among workers.
The closure at Sioux Falls, S.D., affecting four to five per cent of U.S. pork production, was the latest of a series of closures or slowdowns at beef, pork and poultry plants around the country.
Meat packing giant JBS USA on Monday announced it would temporarily shut its Greeley, Colorado, beef plant until April 24. The plant slaughters about 5,400 cattle a day, according to Kerns and Associates, or about five per cent of the daily U.S. slaughter.
“If these plants keep shutting down, we’re going to have a major issue,” said Ted Seifried, chief market strategist for Zaner Ag Hedge.
“We’ve got the animals, but if we can’t get them processed and the meat to grocery stores, we’ve got a huge backup of product. What we were concerned with at the beginning of this crisis is now happening.”
Chicago Mercantile Exchange (CME) June lean hog futures fell by the daily trading limit of 3.75 cents, to 44.925 cents/lb., just above a contract low of 43.825 cents posted last week (all figures US$). The regular daily trading limit, which the CME officially increased from three cents on Monday, will be expanded to 5.5 cents for Tuesday’s session.
CME June live cattle futures ended the day down three cents at 81.375 cents/lb. and May feeder cattle futures settled down 4.5 cents at 114.45 cents/lb. Tuesday’s trading limits will expand to 4.5 cents for live cattle and 6.75 cents for feeders.
The meat packer closures would leave livestock producers with fewer buyers for their animals, which puts downward pressure on live animal prices.
Hogs in the closely followed Iowa and southern Minnesota direct market were down nearly $2/cwt on Monday, according to the U.S. Department of Agriculture (USDA).
Cash fed cattle prices fell $7/cwt last week in the southern U.S. Plains market, according to traders, and could slump further in the weekly round of packer buying later this week.
Meat prices, however, have somewhat stabilized following a recent slump, with wholesale pork cutout about unchanged on Monday and choice and select boxed beef up about $2-$3/cwt, according to USDA.
— Reporting for Reuters by Karl Plume in Chicago.