U.S. livestock: Cattle futures dive, led by energy, equity markets

CME feeder cattle close limit down

CME April 2020 feeder cattle with 20-, 50- and 100-day moving averages. (Barchart)

Chicago | Reuters — U.S. live cattle futures fell on Monday for a third straight session and hit life-of-contract lows following a plunge in crude oil and equity markets amid fears of a global recession, traders said.

“When you have the stock market losing five to seven per cent of its value in a day, that type of stuff is going to spill over into the cattle, and that is what we saw today,” said Jeff French, analyst with Top Third Ag Marketing.

Chicago Mercantile Exchange April live cattle settled down 2.9 cents at 102.85 cents/lb. after falling the daily three-cent limit to 102.75 cents, a contract low (all figures US$).

CME April feeder cattle settled down their limit of 4.5 cents to end at 125.55 cents/lb. Daily limits for feeder cattle futures will widen to 6.75 cents for Tuesday’s trade, the exchange said.

Crude oil prices suffered their biggest daily rout since the 1991 Gulf War as top producers Saudi Arabia and Russia began a price war that threatens to overwhelm global oil markets with supply. At the same time, the rapid spread of coronavirus stoked fears of a recession, and the Dow Jones Industrial Average fell more than 2,000 points, nearly eight per cent.

Along with spillover weakness from Wall Street, cattle markets faced a threat of reduced consumer demand for pricey cuts of beef.

“It’s blown out of proportion, but in Chicago, just look at the business meetings that have been canceled. That’s steak dinners that they (attendees) are not going to get,” French said.

“If consumers are feeling like they are losing money in the stock market and they are penny-conscious, beef is the most expensive protein out there,” French said.

CME lean hog futures also declined, with the benchmark April contract snapping a five-session rally. April hogs settled down 2.925 cents at 63 cents/lb. after falling the daily three-cent limit to 62.925 cents.

“The hogs just got caught up in the sell-off,” French said.

— Julie Ingwersen is a Reuters commodities correspondent in Chicago.

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