Chicago | Reuters — U.S. cattle futures rose Tuesday in a turnaround from recent losses, supported by a temporary easing of concerns over meat plants’ shutting due to cases of the COVID-19 coronavirus among workers, analysts said.
Livestock markets have been fixated on shutdowns of meat plants because processing disruptions cause a backup in supplies of farm animals. Traders hope facilities that have closed will reopen in a week or two, restoring the nation’s ability to slaughter hogs and cattle and process them into pork and beef.
JBS USA said on Monday it would temporarily shut a major Colorado beef plant until April 24, a day after Smithfield Foods said it would indefinitely shut a massive South Dakota pork plant.
“It’s a scary situation but it’s fairly short term in duration,” said Dennis Smith, commodity broker for Archer Financial Services in Chicago.
June live cattle futures ended up 2.425 cents at 83.8 cents/lb. at the Chicago Mercantile Exchange (all figures US$). May feeder cattle futures rose 0.4 cent at 114.85 cents/lb.
The recovery came after the markets dropped by their maximum daily limits on Monday on worries that more plant closures would leave farmers with fewer buyers for their animals, which puts downward pressure on livestock prices.
June live cattle futures were about $24 under cash prices on Monday, a significant discount, Smith said.
“I think they’re just too cheap,” he said.
Hog futures were mixed as pigs are more sensitive to disruptions at processing plants, traders said. It takes them a shorter time than cattle to reach the weight at which they can go to slaughter. Pigs lose value if they face delays heading to plants and grow too heavy.
CME June lean hog futures fell 0.975 cent to 43.95 cents/lb. and set a contract low of 41.5.
The National Pork Producers Council, which represents U.S. hog farmers, called on the U.S. Department of Agriculture to purchase more than $1 billion in pork, in part to clear out meat supplies that have backed up due to declining restaurant demand.
The agency should buy products like hams and bacon that are packaged for restaurants and use them to supplement food bank programs facing increased demand due to rising unemployment, according to the industry group. The council estimates hog producers will lose about $5 billion this year, or $37 per pig.
— Tom Polansek reports on agriculture and ag commodities for Reuters from Chicago.