Chicago | Reuters — Chicago Mercantile Exchange cattle futures tumbled to multi-week lows on Wednesday as losses in U.S. stocks and fears about a banking crisis spilled into livestock markets, analysts said.
The Dow and S+P 500 closed lower as problems at Credit Suisse piled more pressure on the banking sector.
Declines in equities hit cattle futures in particular because weakness in the economy could dent consumer demand for high-priced beef, said Rich Nelson, chief strategist at brokerage Allendale.
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“This is all the outside market story,” he said.
CME April live cattle ended 1.5 cents weaker at 161.55 cents/lb. and touched its lowest price since Jan. 30 at 161.1 cents (all figures US$). April feeder cattle finished 2.5 cent lower at 193.25 cents/lb. and touched its lowest price since Feb. 24 at 192.65 cents.
CME April lean hogs finished down 1.65 cent at 83.75 cents/lb. and set their lowest price since March 7 at 83.575 cents.
“Outside markets and the whole risk-off attitude on everything definitely was in play,” a hog trader said.
Hog futures are too high based on where cash prices and the cutout are trading, the trader said.
The pork carcass cutout dropped by $1.99, to $86.38 per hundredweight (cwt), according to the U.S. Department of Agriculture. Hams sank by $6.34.
USDA said separately that average hog weights rose to 287.1 lbs. in the week ended March 11 from 285.9 lbs. a week earlier.
Traders on Thursday will review weekly U.S. export sales data for beef and pork, after USDA reported poor weekly sales last week.
“End users have backed off on beef and pork buying,” Nelson said. “The quantity they are procuring for future delivery has begun to slip back.”
In Brazil, beef processors are losing $20 million to $25 million per working day after a self-imposed trade ban halted sales to China, agribusiness consultancy Datagro Pecuaria said.
— Tom Polansek reports on agriculture and ag commodities for Reuters from Chicago.
