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CME update: US live cattle futures dive as markets become more uncertain

07 April 2020

US live cattle futures fell to their daily trading limit on 6 April – prices for the front-month contract hit their lowest levels since December 2009.

According to reporting from Reuters, beef inventories remain robust as the US restaurant industry remains shuttered due to the coronavirus.

April live cattle were down the 4.5-cent limit at 83.825 cents per pound, while actively traded June futures finished at 79.85 cents, down 1.000 cent and the lowest for a June contract in at least 11 years.

"Prices are getting low enough, and low prices tend to correct the market," said Terry Reilly, a senior analyst with Futures International in Chicago. "We could see that in the livestock markets in the week to come.”

May feeder cattle futures settled up 1.200 cents at 109.30 cents a pound.

Trading limits for all three commodities will remain at their expanded levels of 4.5 cents on Tuesday, the CME said.

Though US meat exports have been growing in recent months, the loss of restaurant sales and school lunch programmes – principal buyers of US beef – have come as a blow to the livestock and meat-packing sector, said Karl Setzer, commodity risk analyst for Agrivisor.

"We cannot consume as much meat as we're producing, and we can only get so much out in exports," Setzer said. "We have oversupplied this market on beef and pork - but especially on pork."

COVID-19 has already caused supply chain nightmares in the US.

Multiple slaughterhouses have been closed as workers have become infected.

Read more about this story here.


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