Chicago | Reuters — Chicago Mercantile Exchange cattle futures fell to their lowest prices since June on Monday on concerns that U.S. ranchers could temporarily lose a place to deliver their livestock for slaughter after a fire damaged a JBS USA beef plant.
JBS, owned by Brazilian firm JBS SA, halted production at the plant in Grand Island, Nebraska, which slaughters about five per cent of U.S. cattle. The company later said it expects to resume operations on Tuesday.
Uncertainty about when the plant will reopen rattled cattle futures because the industry does not have extra capacity to process livestock at other plants, analysts said. That means cattle could back up in feedlots and on ranches if a major plant closes for an extended period of time.
“When you lose that packing capacity, there’s going to be more cattle than capacity to go around,” said Matt Wiegand, a risk management consultant and commodity broker at FuturesOne in Nebraska. “Then you’re going to get cheaper cattle.”
CME December live cattle tumbled 1.075 cent to 127.15 cents/lb. and reached their lowest price since June 1. October feeder cattle slid 2.275 cents, to 155.45 cents/lb., touching its lowest since June 11.
Boxed beef prices eased even though production dipped due to the plant fire. Choice cuts of boxed beef fell $1.29, to $325.93/cwt, while select cuts dropped $1.21, to $292.16/cwt, the U.S. Department of Agriculture said.
The JBS plant has the capacity to slaughter 6,000 cattle a day, according to industry estimates. Meatpackers typically slaughter about 120,000 cattle per day nationwide.
On Monday, meat companies processed 114,000 cattle and 471,000 hogs, according to the USDA.
In the pork market, hog futures extended a recent slump. Most-active CME October lean hog futures declined 1.675 cents, to 80.775 cents/lb., and hit its lowest price since March 22.
— Tom Polansek reports on agriculture and ag commodities for Reuters from Chicago.