Chicago | Reuters — U.S. cattle and hog futures rose on Wednesday amid a flurry of technical buying — with some live and feeder cattle futures surging to daily trading limits — as investors said they were keeping a close eye on signs of packing plants reopening in the wake of coronavirus infections among workers.
Growing concerns that renewed tariff jockeying between the U.S. and China might upset U.S. pork exports to the country also kept livestock futures trading within a relatively narrow range early in the session, traders said.
But optimism that both domestic and export demand for meat will grow gave the market a late-session bump, three traders said.
Chicago Mercantile Exchange (CME) June hogs settled up 1.3 cents at 65.575 cents/lb., reversing Tuesday’s contract loss (all figures US$).
June live cattle futures rose to its daily trading limit of three cents, settling at 89.475 cents/lb. August feeder cattle rose to its daily trading limit of 4.5 cents, to close at 132.75 cents per pound.
The market continues to see historically high beef and pork prices, and packer margins remain strong.
Estimated U.S. beef packer margins on Wednesday were $645.50 per head, unchanged from Tuesday’s prices. Beef packer margins were $118 a year ago, according to livestock marketing advisory service HedgersEdge.com LLC.
Meanwhile, pork packers saw margins hit $103.95 a head on Wednesday — unchanged from Tuesday — compared to $89.25 a week earlier and negative $5 a year ago.
U.S. President Donald Trump has declared meat processing essential, but analysts caution that workers are still afraid to go back to work, even with safety measures and limited production.
Still, livestock traders said market concern over limitations in meat processing capacity has been factored into the livestock futures prices — and there is growing optimism among investors that some of the U.S. food supply chain snarls could begin to ease.
Tyson Foods will resume limited production at its largest U.S. pork plant in Waterloo, Iowa, more than two weeks after closing the facility because of a coronavirus outbreak among workers.
“The Waterloo plant is going to open up with 25 to 50 per cent capacity,” said Karl Setzer, commodity risk analyst for AgriVisor, who cautioned, “It’s going to slow down the process, because the companies will not be able to put as many animals through these plants.”
— P.J. Huffstutter reports on agriculture and agribusiness for Reuters from Chicago.