Livestock prices last week settled mixed: LCM0 -8.575 (-9.59%), LHM0 -15.925 (-24.79%).Â
Jun live cattle on Friday tumbled to a contract low and finished the week down sharply by -9.59%. Cattle prices sold off Friday with nearest-futures (J20) plunging to a 10-year low on concern the coronavirus pandemic has yet to peak in the U.S., which may keep restaurants closed for longer and is negative for domestic beef demand. There is also concern the coronavirus outbreak will reduce U.S slaughterhouse capacity and leave cattle ranchers without a market for their animals. In fact, JBS SA, the world’s biggest beef producer, reduced output at a plant in Pennsylvania after several workers contracted the virus. Also, the massive loss of jobs from the shutdown of the U.S. economy has undercut domestic demand for more expensive beef as wholesale beef prices fell to 3-week low Friday. Also, beef packer profit margins fell to a 2-week low Thursday, which discourages packers from purchasing more cattle. Finally, the cash market has plummeted to a 1-1/2 year low on Thursday, taking cattle futures prices down with it. Beef supplies are ample as the USDA reported Mar 19 that U.S. Feb commercial beef production rose +7.2% y/y to 2.131 bln lbs. The USDA projects U.S. 2020 beef exports will climb +8.0% y/y to a record 3.265 bln lbs. Friday’s monthly USDA trade data showed an improvement in foreign demand for U.S. beef with U.S. Jan-Feb beef exports up +11.5% y/y to 502.1146 million lbs. Beef supplies are projected to be robust with USDA estimates for U.S. 2019/20 beef production to climb +2.0% y/y to a record 27.766 bln lbs. Â
Jun lean hog prices on Friday sold off to a contract low and finished the week down sharply by -24.79%. Hog prices were in free-fall this week as the April nearest-futures contract plummeted to a 3-1/2 year low Friday on concern the coronavirus pandemic has yet to peak in the U.S., which may keep restaurants closed for longer and is negative for domestic pork demand. Wholesale pork prices tumbled to a 13-month low Thursday, a sign of weak domestic pork demand. Also, global pork demand has plummeted as the spread of the coronavirus prompted the cancellation of events and closure of schools and businesses worldwide. In addition, pork packer profit margins slumped to 7-month low Wednesday, which discourages packers from purchasing additional hogs to process. Finally, the cash market is weak and is weighing on hog futures prices as cash hogs dropped to a 4-month low Thursday. Pork supplies are ample after the USDA reported Mar 19 that U.S. Feb pork production rose +6.4% y/y to 2.306 bln lbs. Chinese domestic pork demand has been dampened by the pandemic. China’s hog herd has been decimated by African swine fever as China reported its 2019 pork production dropped -21.3% y/y. Foreign demand for U.S. pork has strengthened as Mexico, the top importer of U.S. pork, has resumed purchases and China has ramped up its pork buying after its recent Phase-1 agreement with the U.S. Friday’s monthly USDA data shows U.S. Jan-Feb pork exports jumped +42.1% to 1.321 bln lbs. The USDA projects that U.S. 2020 pork exports will jump +22.6% y/y to a record 7.75 bln lbs and that U.S. 2020 pork production will climb +4.9% y/y to a record 28.999 bln lbs. Â