U.S. livestock: Cattle futures retreat as COVID surge stokes demand worries

CME lean hog futures end mixed

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

Chicago | Reuters — U.S. cattle futures fell on Wednesday as rising coronavirus infection rates stoked concerns about potential supply-chain disruptions and reduced demand for beef as health restrictions shutter restaurants and discourage travel.

U.S. stocks dove on Wednesday as investors weighed surging COVID-19 infections and mounting shutdowns against encouraging vaccine developments.

An April plunge in cattle futures to decade lows during the first U.S. coronavirus spike remains fresh in traders’ minds.

“The whole livestock complex is concerned about another shutdown,” said Craig VanDyke, analyst with Top Third Ag Marketing. “It’s a problem for the protein sector.”

Chicago Mercantile Exchange December live cattle dropped 0.675 cent to 110.65 cents/lb., while actively traded February futures fell 0.425 cent, to 113.15 cents/lb. (all figures US$). January feeder cattle tumbled 2.425 cents, to 137.3 cents/lb.

Wholesale beef prices remain firm, but investors fear the rise could be short-lived.

“They’re loading up right now, tying to store as much as they can and then see what happens. If there’s a slowdown in the chain, they’ll then still have product to move,” VanDyke said.

The U.S. Department of Agriculture (USDA) said the choice boxed beef cutout jumped $2.12 on Wednesday to $235.84/cwt, the highest since June.

Disappointing cash cattle sales at central and southern Plains feedlot markets added pressure to futures.

A small number of cattle traded at Plains feedlots at $110/cwt, steady with the top trades last week. Firm packer bids earlier in the week had initially fueled hopes that cash prices would be higher this week.

Lean hog futures ended mixed on Wednesday as traders weighed potential COVID-19 disruptions, export prospects and weak cash hog and pork prices.

December lean hogs settled at 65.8 cents/lb. while actively traded February ended at 65.9 cents/lb., both up 0.275. Deferred contracts were down as much as 0.55 cent.

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

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