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CME update: cattle futures rise on technical buying as processing plants reopen

07 May 2020

US cattle futures surged on 6 May amid increased technical buying as investors said they were monitoring signs of meat packing plants reopening after COVID-19 infections among workers.

According to Reuters, some live and feeder CME cattle futures rose to their daily trading limits on Wednesday. Optimism that both domestic and export demand for meat will grow gave the market a late-session bump, three traders said.

June live cattle futures rose to its daily trading limit of 3.000 cents, settling at 89.475 cents per pound. August feeder cattle rose to its daily trading limit of 4.500 cents, to close at 132.750 cents per pound.

The market continues to see historically high beef and pork prices, and packer margins remain strong.

Estimated US beef packer margins on Wednesday were $645.50 per head, unchanged from Tuesday's prices. Beef packer margins were $118 a year ago, according to livestock marketing advisory service HedgersEdge.com LLC.

Though President Trump declared meat processing an essential industry, analysts caution that workers are still afraid to return to work – even with safety measures and limited production.

Still, livestock traders said market concern over limitations in meat processing capacity has been factored into the livestock futures prices - and there is growing optimism among investors that some of the US food supply chain knots could begin to ease.

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