CME update: US cattle futures rise on strong beef prices and restricting supplies

US live cattle futures surged by their daily trading limits for a second straight session on 7 May on soaring beef prices and concerns of meat shortages due to pacing plant closures due to COVID-19.
calendar icon 8 May 2020
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Reuters reports that idled slaughterhouses across North America due to coronavirus have left ranchers without a place to ship their animals, and major outlets and retailers including Kroger and Costco have limited sales of beef items

Wholesale boxed beef prices have surged to historic highs, taking with them meat packer margins, which have also swelled.

The price of cattle in the cash market has rebounded after US President Trump on 6 May said he had urged the Department of Justice to look into allegations that the meatpacking industry broke antitrust law.

Cash cattle traded earlier this week at $95 per cwt, but prices paid by at least one large packer have since jumped to $110 in the southern Plains.

"You can't turn on the news today without hearing about meat shortages and all-time-high prices," said Jeff French, analyst with Top Third Ag Marketing. "The packers got the call."

Chicago Mercantile Exchange (CME) June live cattle futures jumped to 93.975 cents per pound, rising by an expanded 4.5-cent daily limit following Wednesday's 3-cent limit gain. The daily limit will remain at 4.5 cents on Friday, the CME said.

Feeder cattle futures followed live cattle higher, with the actively traded August contract ending up 5.4 cents at 138.150 cents per pound.

Trump has declared meat processing essential, but some workers have said they are afraid to return, even with safety measures and limited production.

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