CME update: cattle futures rise on hopes that US slaughterhouses will reopen
US cattle futures rose on 14 April reversing recent losses.
15 April 2020
2 minute read
According to Reuters, analysts reported that the turnaround was supported by easing concerns over meat plants’ shuttering due to cases of COVID-19 among workers.
US livestock markets have focused on shutdowns of meat plants because processing slowdowns cause a backlog in supplies of cattle and pigs. Traders hope facilities that have closed will reopen before the end of the month, restoring the nation’s capacity to slaughter cattle and process them into beef for consumers.
JBS USA said on Monday it would temporarily shut a major Colorado beef plant until 24 April, a day after Smithfield Foods Inc 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 83.800 cents per pound at the Chicago Mercantile Exchange. May feeder cattle futures rose 0.400 cent at 114.850 cents per pound.
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.
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