Livestock prices this week settled mixed: LCJ0 +2.300 (+2.33%), LHJ0 -3.125 (-5.08%).Â
Apr live cattle on Friday closed limit-down but still finished the week up +2.33%. Apr cattle retreated Friday on concern the coronavirus pandemic may last longer than initially feared after cases of the virus surpassed those in China, which may keep restaurants closed for longer and is negative for domestic beef demand. Live cattle prices earlier slumped to a 9-1/2 year nearest-futures low on Mar 16 as the spread of the coronavirus prompted consumers to stay away from crowds and avoid eating out in restaurants. Apr cattle rallied to a 3-week high Wednesday on a surge in beef demand. The coronavirus pandemic has prompted many areas of the U.S. to self-quarantine, which has led to frenzied beef buying by U.S. consumers who cleared out meat cases in grocery stores in anticipation of lengthy periods of isolation and potential supply chain disruptions. Wholesale beef prices rose to a 4-3/4 year high Monday. Also, beef packer profit margins soared to a record high Tuesday (data from 2013), which encourages packers to purchase more cattle. 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. 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. Monday’s USDA Cold Storage report was bearish for cattle as it showed U.S. beef in cold storage in Feb rose +0.6% m/m and +3.6% y/y to 490.981 mln lbs.
Apr lean hog prices on Friday dropped to a 1-week low and finished the week down -5.08%. Apr hogs retreated Friday on concern the coronavirus pandemic may last longer than initially feared after cases of the virus in the U.S. surpassed those in China, which may keep U.S. restaurants closed for longer and is negative for domestic pork demand. Hog prices earlier slumped to a 17-1/4 month nearest-futures low on Mar 16 as global pork demand plummeted as the spread of the coronavirus prompted the cancellation of events and closure of schools. Also, consumers are staying away from crowds and are avoiding eating out in any restaurants that remain open. Hog prices also fell back after the USDA’s Q1 Hogs & Pigs Report on Thursday showed the total hog herd on Mar 1 rose +4.0% y/y to 77.629 mln hogs, higher than expectations of +3.5% y/y. Apr hogs rallied to a 5-week high Tuesday as the coronavirus pandemic prompted many areas of the U.S. to self-quarantine, which led to frenzied pork buying by U.S. consumers who cleared out meat cases in grocery stores in anticipation of lengthy periods of isolation and potential supply chain disruptions. Wholesale pork prices surged to a 4-month high Monday. Also, pork packer profit margins jumped to 2-month high Tuesday, which encouraged packers to purchase additional hogs to process. 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 government’s travel restrictions on more than 40 million people to contain the spread of the coronavirus. 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. 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
Monday’s USDA Cold Storage report was bearish for hogs as it showed U.S. pork in cold storage in Feb rose +5.8% m/m and +7.5% y/y to 661.660 mln lbs. Thursday’s USDA Q1 Hogs & Pigs Report showed the total hog herd on Mar 1 rose +4.0% y/y to 77.629 mln hogs, higher than expectations of +3.5% y/y. Sows kept for breeding in Q1 rose +0.4% y/y to 6.375 mln, below expectations of +1.4% y/y. Piglets per litter in Q1 rose +2.8% y/y to 11.00, higher than expectations of +2.5% y/y.