Cattle futures rise to meet their daily limits as demand and packer margins strengthen

US cattle futures rose to meet their expanded daily limit on 24 March as traders reacted to soaring profit margins for beef packers.
calendar icon 25 March 2020
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According to reporting from Reuters, traders feel that the market’s strong performance will lift prices in the cash cattle market this week.

Retail demand for meat continues to skyrocket as consumers stock up on supplies amid the coronavirus outbreak – strengthening margins.

"The knee-jerk reaction in this coronavirus deal was to sell the livestock markets. They thought demand and cut-outs would fall drastically, and we saw the exact opposite. So the market is correcting itself," said Joe Vaclavik, president of Standard Grain, a brokerage.

Profit margins for beef processors reached a record high of $611.10 per head of cattle on Tuesday, according to livestock marketing advisory service HedgersEdge.com. That was up from $580.70 on Monday and $317.10 a week ago.

Chicago Mercantile Exchange June live cattle futures settled up the expanded 4.5-cent daily limit at 97.025 cents per pound and CME's May feeder cattle futures contract ended up 6.750 cents at 129.500 cents a pound.

The exchange will keep daily limits at 4.5 cents for live cattle futures and 6.750 cents for feeder cattle futures on Wednesday, except for the spot March feeder cattle contract, which expires this week. The CME this week expanded the daily limit for March feeders to 10 cents per pound "to ensure that trading is not restrained."

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