Chicago | Reuters — U.S. livestock futures on the Chicago Mercantile Exchange (CME) plunged by their daily trading limits on Wednesday as stricter coronavirus emergency measures hammered stock markets and deepened worries about a global recession.
Live cattle futures dropped for the fourth time in five sessions, erasing all of the prior session’s gains, while lean hogs slumped to their lowest point since August 2018 after U.S. President Donald Trump extended coronavirus emergency measures through the end of April.
Stay-at-home orders and restaurant closures have slammed livestock prices as traders weighed burdensome meat supplies against a downturn in demand and livestock supply chain disruptions.
“This drop was coronavirus related. Specifically, it was the White House news conference on Tuesday creating an environment where the market had to reevaluate what the supply/demand was going to be moving forward,” said Mike Zuzolo, president of Global Commodity Analytics.
“This was wide risk-off selling and computer trading throwing in the towel. We hit sell stops and other triggers,” he said.
CME April live cattle fell to 97.325 cents/lb., while actively-traded June futures finished at 87.575 cents, both down by their expanded 4.5-cent daily limit (all figures US$). All other live cattle contracts, except for thinly traded August 2021 futures, also ended limit-down.
All feeder cattle contracts fell by their daily 4.5-cent limit as well, with actively traded May futures ending at 118.4 cents/lb.
All lean hog contracts also dropped by their daily limits, with April futures ending at 49.2 cents/lb. and most-active June 57.325 cents, down three cents. Spot April through July 2020 contracts posted new life-of-contract lows.
The trading limit for live cattle will remain at the expanded 4.5 cents on Thursday, while the feeder cattle limit will increase to 6.75 cents and the lean hog limit will widen to 4.5 cents, according to the CME Group.
Sharply lower cash market prices kept pressure on futures as key beef and pork market indicators continued to dive amid coronavirus-fueled demand uncertainty.
A limited number of cattle traded at least $4/cwt lower on the closely followed weekly online fed cattle exchange on Wednesday.
The choice boxed beef cutout value plunged to $235.17/cwt on Wednesday, down nearly $8 from the previous day, while the pork carcass cutout fell nearly $3, to $62.05/cwt, according to the U.S. Department of Agriculture.
— Karl Plume reports on agriculture and ag commodities for Reuters from Chicago.