Livestock prices last week settled sharply lower: LCJ0 -10.175 (-9.62%), LHJ0 -9.550 (-14.49%).Â
Apr live cattle on Friday plummeted to a 6-month nearest-futures low, closed limit-down, and finished the week down sharply by -9.62%. Cattle prices plummeted Friday after President Trump declared a national emergency due to the coronavirus pandemic. Global beef demand is taking a hit as the spread of the coronavirus is prompting consumers to stay away from crowds and avoiding eating out in restaurants. The USDA on Tuesday cut their U.S. 2020 beef export estimates. The cash market is also weakening, which is dragging down cattle futures prices after cash cattle prices tumbled to a 5-1/4 month low Thursday. On the positive side, beef packer profit margins rose to a 3-month high Friday, which may boost cattle demand from beef packers. Beef supplies are ample as the USDA reported Feb 20 that U.S. commercial beef production in Jan rose +5.4% m/m and +3.4% y/y to 2.388 mln lbs. In mid-December, the nearest-futures Dec-2019 contract rallied to a 9-3/4 month high on improved prospects for an increase in U.S. beef exports after China agreed to buy more U.S. ag products as part of the U.S./China phase-one trade deal. The USDA projects U.S. 2020 beef exports will climb +8.0% y/y to a record 3.265 bln lbs. USDA trade data on Mar 2 showed U.S. Jan beef exports rose +3.1% y/y to 245.086 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.
Apr lean hog prices on Friday fell to a contract and 1-month nearest-futures low, closed limit-down, and finished the week down sharply by -14.49%. Hogs prices tumbled Friday after President Trump declared a national emergency due to the coronavirus pandemic. U.S. pork demand is taking a hit as the spread of the coronavirus is prompting cancellation of events and closure of schools. Also, consumers are staying away from crowds and avoiding eating out in restaurants. The USDA reported Thursday that China canceled purchases of 45,200 MT of U.S. pork the week ended Mar 5, the most ever in data going back to 2010, as imports were piling up at Chinese ports that were closed due to the coronavirus. The downside in hogs may be contained on strength in domestic pork demand after wholesale pork prices rose to a 5-week high Thursday. Pork supplies are ample after the USDA reported Feb 20 that U.S. commercial pork production in Jan rose +4.5% m/m and +7.6% y/y to 2.553 mln lbs. Apr hogs slumped to a contract low on Feb 3 and nearest-futures (G20) dropped to a 1-year low on concern the spread of the China coronavirus will derail the global economy and undercut demand for commodities, including pork. Chinese domestic pork demand has been dampened by the government’s travel restrictions on more than 40 million people to contain the spread of the coronavirus. Due to Chinese tariffs on U.S. pork, China has mainly imported pork from Europe with European 2019 Jan-Sep pork exports to China up +55% y/y to 1.55 MMT. The USDA’s FAS on Mar 4 forecast EU 2020 pork production will climb +0.9% to a record 24.15 MMT and that EU 2020 pork exports will climb +9.8% to a record 3.9 MMT. 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 U.S. 2019 pork exports rose +7.6% y/y to 6.321 bln lbs as Mexico, the top importer of U.S. pork, has resumed purchases. Monday’s USDA data showed U.S. Jan pork exports jumped +38.8% to 663.211 mln 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