Chicago | Reuters — U.S. lean hog futures on Monday sank by an expanded daily limit and cattle futures weakened on increased concerns that slaughterhouses will close due to the spread of the COVID-19 coronavirus.
Traders worry that shutdowns could back up supplies of livestock by removing markets for the animals.
Canada’s largest hog producer, Olymel, on Sunday said it would shut a Quebec hog slaughter and cutting plant for two weeks after nine employees tested positive for the coronavirus.
“The decision was made partly to protect the workers, and partly to limit community transmission,” Olymel said in a statement.
Chicago Mercantile Exchange April lean hog futures dropped the widened limit of 4.5 cents at 53.95 cents/lb. (all figures US$). Most-active June lean hogs ended down 4.475 cents at 59.775 and set a life-of-contract low. Limits for hogs will remain at 4.5 cents for Tuesday’s trading session.
CME June live cattle finished down 0.35 cent at 89.075 cents/lb., while the nearby April contract fell 1.75 cents to 99.2 cents. CME May feeder cattle futures settled down 0.025 cent at 120.9 cents/lb.
Futures traders seem convinced that the coronavirus will disrupt U.S. meat processing, said Dennis Smith, commodity broker for Archer Financial Services in Chicago.
“They seem to be dialing in a worst-case scenario going into the peak of this virus,” he said
Weaker wholesale meat prices added pressure to futures, analysts said. The decline indicates that consumers may be scaling back hoarding at grocery stores after stocking their freezers with meat, they said.
The U.S. pork cutout fell by $3.08, its fifth straight daily decline, according to USDA data.
Boxed beef prices softened after climbing recently due to the surge in demand at supermarkets.
Margins for beef packers eased too, after setting a record high of more than $600 per head of cattle last week, according to HedgersEdge.com.
U.S. senators are calling for investigations of possible price fixing or market manipulation by processors like Tyson Foods and Cargill, after ranchers complained that surging beef prices due to coronavirus hoarding did not translate into higher cattle prices.
— Tom Polansek reports on agriculture and ag commodities for Reuters from Chicago.