Livestock prices last week settled higher: LCM0 +3.525 (+4.36%), LHM0 +0.350 (+0.72%).Â
June live cattle on Thursday closed lower but still finished the week up +4.36%. Jun cattle rallied to a 1-week high Wednesday on reduced U.S. beef production after JBS on Tuesday suspended operations at a beef processing plant in Pennsylvania for two weeks after workers there tested positive for the coronavirus. Also, Cargill said on Tuesday it was idling operations at a beef plant in Pennsylvania after several employees there tested positive for Covid-19. Jun cattle had tumbled to a contract low Monday and nearest-futures (J20) plunged to a 10-1/4 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. 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 a 4-week low Wednesday. Also, the cash market has plummeted to a 6-1/4 month low on Wednesday, 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. Foreign demand for U.S. beef has improved 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
June lean hog prices on Thursday closed lower but still finished the week up +0.72%. Jun hogs posted a 1-week high Wednesday on concerns about lower U.S. pork output after pork processing plants in Iowa and Georgia were closed this week and Smithfield Foods suspended pork production at its plant in South Dakota after workers there tested positive for the coronavirus. Jun hog prices sank to a contract low Monday and the April nearest-futures contract plummeted to a 17-1/2 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 pork demand. Wholesale pork prices plunged to a 17-1/2 year low Thursday, a sign of tepid domestic pork demand. Also, the cash market collapsed and weighed on hog futures prices as cash hogs dropped to a 1-1/2 year low Thursday. U.S. pork demand has plummeted as the spread of the coronavirus prompted the cancellation of events and the closure of schools and restaurants. 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. The Mar 27 USDA Q1 Hogs & Pigs report showed a record U.S. hog herd on Mar 1 at 77.6 million hogs. 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. 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