US Livestock futures plunged on 13 April as worries of reduced meat processing capacity clouded the market.
According to Reuters, after meat processing giant Smithfield Foods announced that it would shut one of its pork plants indefinitely due to coronavirus infections among plant workers, livestock futures tumbled.
The closure of the South Dakota plant was the latest in a series of plant closures and production slowdowns at beef and other meat processing plants around the country.
On Monday 13 April, meat packer JBS USA announced it would temporarily shut its beef plant in Greely, Colorado until 24 April. The plant slaughters about 5,400 cattle a day, according to Kerns and Associates, or about 5 percent of the daily US slaughter.
“If these plants keep shutting down, we’re going to have a major issue,” said Ted Seifried, chief market strategist for Zaner Ag Hedge.
“We’ve got the animals, but if we can’t get them processed and the meat to grocery stores, we’ve got a huge backup of product. What we were concerned with at the beginning of this crisis is now happening.”
CME June live cattle futures ended the day down 3 cents at 81.375 cents per pound and May feeder cattle futures settled down 4.5 cents at 114.450 cents per pound. Tuesday’s trading limits will expand to 4.5 cents for live cattle and 6.75 cents for feeders.
The meat packer closures would leave livestock producers with fewer buyers for their animals, which puts downward pressure on live animal prices.
Cash fed cattle prices fell $7 per cwt last week in the southern US Plains market, according to traders, and could slump further in the weekly round of packer buying later this week.
Meat prices, however, have somewhat stabilised following a recent slump, with choice and select boxed beef up about $2 to $3 per cwt, according to the USDA.
