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CME update: cattle futures stabilise amid further meat plant shutdowns

16 April 2020

US cattle futures recovered on 15 April as markets advanced from recent losses that traders believe dropped prices too far below the cash markets.

Reuters reports that futures have fallen recently as major meat packers have closed slaughterhouses due to the spread of COVID-19 among employees. The closures create bottlenecks on supplies of livestock, impacting prices.

June live cattle futures were about $24 under cash prices at the start of the week, a significant discount, according to analysts.

"The discount's just too big," said Don Roose, president of Iowa-based broker US Commodities.

June live cattle futures ended up 1.025 cents at 84.825 cents per pound at the Chicago Mercantile Exchange. May feeder cattle futures rose 0.725 cent to 115.575 cents per pound.

Meat processors are announcing additional shutdowns or slowdown in North American plants.

Cargill Inc confirmed it temporarily reduced work shifts at a beef plant in Fort Morgan, Colorado, to "minimise the impact of COVID-19," the disease caused by the virus.

"While you're slowing the kill capacity down, we're not getting enough meat to the retail level," Roose said.

Retail demand for meat has grown as consumers are staying home to protect themselves from coronavirus. Restaurant demand has all but disappeared as establishments remain closed.

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