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CME update: cattle futures rebound as the quarter closes

01 April 2020

US live cattle futures rose, nearly meeting their 3-cent daily limit on 31 March.

According to reporting from Reuters, the rally occurred as part of an end-of-month and end-of-quarter profit-taking bounce after a steep drop. Traders attributed the earlier drop to jitters over the economic impacts of coronavirus.

After governments imposed stay-at-home orders and restrictions on travel, cattle futures fell to levels well below their cash market values, leaving the market poised for a rebound.

"Today's action was end-of-month and end-of-quarter position squaring. We've come down a long way," said Alan Brugler, president of Brugler Marketing & Management.

Cash beef prices and beef packer margins have dropped from recent highs as the market reacts to the longer-term impact of prolonged coronavirus restrictions.

Cash cattle markets have provided little direction this week as packer bids at feedlot cattle markets in the US Plains remain elusive after cattle traded at $117 to $120 per cwt last week.

Livestock traders, meanwhile, are watching for any potential disruptions to the food supply chain from coronavirus infections. Traders worry that shutdowns could back up supplies of livestock by removing markets for the animals.

The Chicago Mercantile Exchange April contract gained 2.625 cents to 101.825 cents per pound, while actively-traded June futures finished up 3.000 cents at 92.075 cents. Limits for live cattle will expand to 4.5 cents for Wednesday's trading session after the limit-up close.

CME May feeder cattle futures settled 2.000 cents higher at 122.900 cents a pound.

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