US live cattle futures closed higher on 4 May as meat processing plants reopen after closures due to COVID-19 outbreaks among workers.
According to Reuters, Mark Shultz, chief analyst at Northstar commodity, believes that beef cutout prices also gave futures a boost.
In comparison, “futures in both cases are extremely low,” Schultz said. “They have room to go up.”
Monday’s trading follows growing market optimism after last week. China, a key buyer of US commodities, purchased nearly half of all pork sales that week.
However, those market hopes have contracted as the Trump administration announced it was considering a new round of tariffs on China in response to its handling of the coronavirus outbreak.
Investors are now waiting to see how the market reacts to President Trump’s mandate that US meat processing plants remain open to protect the country’s food supply during the pandemic. They expect that the order will impact packers’ short-term demand for hogs, chicken and cattle.
Plant closures are causing problems for the beef sector. USDA reported that Monday’s daily cattle slaughter was at 75,000 animals – down 36.4 percent from a year earlier – even as the US grilling season grows closer.
“Trump issued this defense production act order to get everybody back open, but it’s going to be a problem, maintaining a healthy workforce,” said Joe Vaclavik, president of Standard Grain.
There are already signs of trouble. Tyson Foods said on Monday that the coronavirus crisis will continue to idle US meat plants and slow production, despite President Trump’s order.
Tight meat supplies at grocers are becoming apparent: Costco Wholesale Corp said Monday it is limiting how much beef, pork and poultry products customers can buy.
Kroger Co has purchase limits on ground beef and fresh pork at some stores.
Chicago Mercantile Exchange June live cattle futures settled up 0.825 cents at 88.075 cents per pound. CME August feeder cattle settled up 1.325 cents at 128.975 cents per pound.
