Chicago | Reuters — U.S. live cattle futures rose on Friday along with cash prices as the federal government probed the beef market.
The price of cattle in the cash market has rebounded since U.S. President Donald Trump on Wednesday said he had urged the federal Justice Department to look into allegations that the meatpacking industry broke antitrust laws.
Cash prices rose to $115 and $116 for cattle from $110 on Thursday and $95 earlier in the week, helping support futures, said Rich Nelson, chief strategist for commodity broker Allendale (all figures US$).
Cash prices had previously suffered as the coronavirus pandemic slowed operations at some slaughterhouses and temporarily closed others, leaving ranchers nowhere to ship their cattle.
Retailers such as Kroger and Costco have limited sales of some meat items as a result, and wholesale boxed beef prices and margins for beef processors have climbed.
“I think packers are saying, ‘We have to give back a little bit of this margin,'” Nelson said.
Beef processor Cargill said allegations of price-fixing lack merit.
Chicago Mercantile Exchange (CME) June live cattle futures rose 0.675 cents to 94.65 cents/lb. The market’s daily limit will revert to its standard of three cents on Monday after temporarily expanding to 4.5 cents on Friday, the exchange said.
August feeder cattle futures fell 1.2 cents to 136.95 cents/lb.
In the pork market, lean hog futures extended a profit-taking setback following a recent climb to five-week highs. CME June hogs settled 2.2 cents lower at 61.7 cents/lb.
Expectations for an increase in pork processing capacity continue to underpin the market, analysts said, as packing plants shuttered by the coronavirus reopen. A lingering backup of animals in need of processing still hangs over the market.
Trump has declared meat processing essential, but some plant employees have said they are afraid to return to work, even with safety measures and limited production.
The U.S. Agriculture Department said Friday that 14 meat and poultry plants that had closed due to outbreaks of the virus were in the process of reopening this week.
The largest union representing U.S. meatpacking workers said on Friday it opposed the reopening of plants because the Trump administration had failed to guarantee workers’ safety.
As of Thursday, about 35 per cent of U.S. slaughter capacity for hogs remained idle, said Steve Meyer, economist for Kerns and Associates. He estimated that about 32-33 per cent was idle on Friday.
— Tom Polansek reports on agriculture and ag commodities for Reuters from Chicago.