U.S. livestock: Bargain-buying investors rally cattle futures, again

Chicago | Reuters — U.S. cattle futures surged for a second straight session on Wednesday, as investors kept snapping up deep discounts in futures prices, traders said.

Lean hog future prices slipped, as concern continued to mount over a glut of domestic pork supplies and uncertainty on how quickly the U.S. sow herd is shrinking.

Chicago Mercantile Exchange (CME) most actively traded live cattle futures ended the day up 1.875 cents at 86.675 cents/lb., while most actively traded feeder cattle futures settled up 5.575 cents at 119.375 cents/lb.

CME most actively traded lean hog futures fell 1.2 cents at 51.45 cents/lb.

Livestock futures have been particularly volatile in recent months, said market analysts, as the coronavirus pandemic has caused a shuttering of the global food service sector — a significant buyer of meat.

But the pricing disconnect between futures prices and the cash market is adding fuel to the market’s volatility and frustration among cattle producers, even as packer margins remain strong. Cash cattle traded in Kansas and Texas at $105 per hundredweight on Wednesday, traders said, down $7 from the bulk of last week’s trade at $112.

“Credit card data recently released shows that restaurant business is starting to stabilize across the country, down 73 per cent from normal levels,” Arlan Suderman, chief commodities economist for INTL FCStone, wrote in a note to clients. “That reduces demand for meat, which the industry is trying to figure out.”

Consumer spending on fresh beef and pork at retail grocers is up. The amount of dollars spent on fresh beef was up 51.6 per cent and fresh pork was up 48.3 per cent for the four-week period ended March 28, compared with a year earlier, according to Nielsen data.

But that increased demand is not making up for the volume of meat normally consumed by the food service supply chain, market analysts said, noting early signs of price-wary consumers leaning toward less expensive cuts ahead of the traditional grilling season in the U.S.

Consumer spending on fresh ground beef was up 61.6 per cent for the four-week period ended March 28, compared with a year earlier, according to Nielsen data. Consumer spending on fresh beef roasts was up 50 per cent, the data found.

— P.J. Huffstutter reports on agriculture and agribusiness for Reuters from Chicago.