U.S. livestock: Cattle futures sag as COVID surge threatens meat demand

Demand uncertainty also weighs on hogs

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

Chicago | Reuters — U.S. livestock futures slumped on Friday as soaring coronavirus cases raised expectations for lockdowns on commerce that will hurt demand for meat from restaurants, hotels and other venues, analysts said.

Cities and states across the country have moved to re-impose restrictions to tame new spikes in COVID-19 infections and hospitalizations.

Additional pressure on cattle futures came from disappointment over cash prices, said Rich Nelson, chief strategist for commodities broker Allendale. Cash cattle traded at $110/cwt, up from $106-$107 last week but below cattle feeders’ expectations for about $111, he said (all figures US$).

“That is being viewed as a disappointment,” Nelson said.

December live cattle futures slid 2.05 cents to 109.925 cents/lb. at the Chicago Mercantile Exchange. January feeder cattle sank 2.85 cents to 137.875 cents/lb. Both contracts touched their lowest prices since Monday.

December lean hog futures slipped 0.9 cent to 64.9 cents/lb. at the CME.

Rising futures prices for corn and soybeans, which are used for animal feed, added pressure to livestock futures, traders said. Producers that buy feeder cattle to fatten them before slaughter will be less willing to pay high prices for the animals if they are facing increased feed costs, analysts said.

Traders are also uncertain over China’s demand for U.S. pork.

USDA reported net U.S. pork export sales in the week ended Nov. 5 were 42,500 tonnes for 2020, up one per cent from the previous week and 36 per cent from the prior four-week average. China, the world’s top pork importer, bought 21,148 tonnes for 2020, the most in five weeks, and another 10,747 tonnes for 2021.

Demand may ease, traders said, as China is attempting to rebuild its hog herd after African swine fever decimated its pork industry over the past two years.

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

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