Chicago | Reuters — U.S. live and feeder cattle futures jumped to one-week highs on Thursday as the markets extended rebounds after diving recently on concerns about the new coronavirus backing up livestock on farms.
Hog futures remained under pressure from disruptions caused by the virus, which has shut pork processing plants run by Smithfield Foods and Tyson Foods.
Live cattle futures have been recovering since the June contract dropped to $24 under cash prices at the start of the week, a historically large discount, amid worries about declining slaughter capacity, according to analysts (all figures US$). Processors including JBS USA and National Beef Packing Co. have closed beef plants due to the coronavirus.
“The spread between cash and where the futures was trading was just way too wide,” said Altin Kalo, agricultural economist for Steiner Consulting.
June live cattle futures rose 1.65 cents, to 86.475 cents/lb., and touched its highest price since April 8 at the Chicago Mercantile Exchange. May feeder cattle futures climbed 2.9 cents to 118.475 cents/lb.
CME June lean hog futures slid 1.45 cents to 43.175 cents/lb.
Traders continued to focus on shutdowns of pork and beef plants.
National Beef said it is suspending operations at a Dodge City, Kansas, beef plant for cleaning and to install stainless steel partitions on the production floor to increase social distancing. Slaughtering will halt on Thursday, Friday and Saturday, while the part of the plant in which employees slice carcasses into meat will be closed on Saturday, Monday and Tuesday, according to the company.
Pork producers are more sensitive than cattle ranchers to disruptions at processing plants, traders said, because it is easier for farmers to delay sending cattle to slaughter. Hogs reach the weight at which they can be slaughtered more quickly than cattle and lose value if they grow too heavy.
“We still haven’t worked through the issue of getting enough pigs to market and not getting backed up,” said Mike Zuzolo, president of Global Commodity Analytics.
Smithfield Foods, the world’s biggest pork processor, said on Wednesday that it would shutter two U.S. plants that process bacon and ham, after closing a separate hog slaughterhouse because of a coronavirus outbreak among employees.
Meat packers slaughtered an estimated 444,000 hogs on Thursday, down from 472,000 a week earlier and 480,00 a year ago, according to the U.S. Department of Agriculture. They slaughtered 92,000 cattle, down from 99,000 a week ago and 122,000 a year earlier.
— Reporting for Reuters by Tom Polansek in Chicago; additional reporting by Christopher Walljasper.