Chicago | Reuters — U.S. cattle futures slid Thursday as the global spread of the COVID-19 coronavirus raised worries about an economic slowdown that could hurt demand for beef.
U.S. beef demand has been strong since last year, helping to push April live cattle futures to a contract high in December. On Friday, though, futures set a contract low that was down 16 per cent from their peak as the coronavirus outbreak also slammed Wall Street.
Global equity markets tumbled more as the number of coronavirus cases outside China mounted, fueling warnings that world growth is likely to reach its weakest level since the global financial crisis.
“The fear is the beef demand is going to take a hit here in the near term,” said Dennis Smith, commodity broker for Archer Financial Services in Chicago.
Most actively traded April live cattle closed 2.625 cents lower at 108.65 cents/lb. at the Chicago Mercantile Exchange (all figures US$). The contract low on Friday was 107.475.
June live cattle futures, the second-most-active contract, sank 1.875 cents to 102.65 cents/lb. April feeder cattle fell 1.9 cents to 133.65 cents/lb.
CME lean hog futures firmed on hopes for increased U.S. pork sales to China, traders said.
The most-active April hogs contract finished 1.075 cents higher at 65.375 cents/lb. and reached its highest since Feb. 26. June hog futures rose 0.55 cent, to 79.375 cents.
The U.S. Department of Agriculture said China bought 4,475 tonnes of U.S. pork from Feb. 21-27, down from 7,223 tonnes a week earlier. U.S. pork shipments to China rose to 17,531 tonnes from 15,701 tonnes a week earlier. Those were second biggest shipments since July 2014, after 18,617 tonnes were reported from Jan. 17-23, according to USDA data.
China said last month it would grant exemptions on retaliatory duties imposed against 696 U.S. goods, including pork, as Beijing seeks to fulfill commitments made in an interim trade deal with the United States.
“Shipments have been really solid,” Smith said. “Sales presumably will take a big spike once they can do it on a tariff-free gig.”
China, the world’s top pork consumer, is grappling with a fatal pig disease that has decimated its herd.
The COVID-19 outbreak clouded the outlook for Chinese demand for U.S. farm products. But China can attain this year’s grain targets, agriculture officials said, adding that a recovery of the pig herd was on track.
— Tom Polansek reports on agriculture and ag commodities for Reuters from Chicago.