Coronavirus concerns pressure livestock futures
Chicago Mercantile Exchange live cattle futures were sharply lower on spillover from the broader market and the U.S. lifting its’ ban on imports of beef from Brazil. February was down $2.72 at $117 and April was $3.00 lower at $115.25.
Feeder cattle were sharply lower, mostly limit down, on the same factors as the live pit. March was $4.17 lower at $136.02 and April was down $4.50 at $137.60.
Direct cash cattle markets were quiet. This week’s showlist looks mixed when compared to last week, higher in Kansas and Texas, lower in Colorado and Nebraska. Widespread trade isn’t expected until the second half of the week. Last week’s business was mostly at $119 to $120 on the live basis, generally steady to $1 higher than the previous week’s weighted average, and mostly $190 dressed, about steady with the week before. Formula and trade volume totals were mixed last week, higher in Texas, lower in Kansas and Nebraska. The USDA’s Cattle on Feed report showed a 1% decline in placements during January, the first year to year dip since August 2019, but the total number of cattle on feed at the start of February was still up 2% on the year. The U.S. has lifted its’ ban on beef imports from Brazil. The USDA’s attaché in Brazil projects 2020 beef production at a record large 10.550 million tons, up 3.4% from 2019, with exports of 2.53 million tons, compared to 2.314 million a year ago. The USDA says beef in cold storage at the end of January was 489.136 million pounds, down 4% on the year.
Boxed beef closed higher on moderate to fairly good demand for moderate offerings. Choice was up $1.98 at $207.07 and Select was $.67 higher at $202.37. The estimated cattle slaughter of 118,000 head was up 11,000 on the week and 3,000 on the year.
In the Oklahoma National Stockyards feeder cattle sale, at midsession, steers and heifers were mostly $6 to $9 lower. Steer calves were lightly tested with a much lower undertone and heifer calves were $4 to $7 lower. The USDA says demand was light with quality called plain to attractive and muddy conditions in parts of the trading area. 63% of the offering were steers and 70% of the run weighed more than 600 pounds. Medium and Large 1 feeder steers weighing 700 to 800 pounds sold at $127 to $138.50 and 800 to 900-pound steers ranged from $122.50 to $136.50. Medium and Large 1 feeder heifers weighing 500 to 600 pounds were reported at $132.50 to $150.50 and 600 to 700-pound heifers brought $123.85 to $134.
Lean hog futures were sharply lower on the broader market losses, demand concerns, and position squaring ahead of the USDA’s Cold Storage report. April was down $2.40 at $64.62 and May was $2.15 lower at $71.87.
Cash hogs were steady to lower, with heavy closing negotiated numbers for the major direct markets. The major direct markets started higher, but buyers were able to reassert their leverage as the day went on. The USDA’s Cold Storage report showed a near record amount of pork at the end of January. The total of 625.188 million pounds was up 11% on the month and just short of the previous all-time high set in 2016. The spread of coronavirus continues to be a big question mark. Domestic demand is holding up relatively well and while the most recent export sales report was disappointing, that was before China rolled back tariffs and announced tariff waivers. The USDA’s attaché in Brazil sees 2020 pork production at 4.155 million tons, 4.5% higher than last year, with exports of 980 million tons, compared to 851 million in 2019. Brazil is expected to continue to be a significant competitor with the U.S. for market share in China, as both nations try to fill the shortfall caused by the African swine fever outbreak.
Pork closed $1.32 higher at $66.32. Loins, butts, ribs, hams, and bellies were firm to sharply higher, including a $4.08 gain for bellies. Picnics were weak. The estimated hog slaughter of 495,000 head was up 10,000 on the week and 139,000 on the year.
National direct barrows and gilts closed $1.03 lower at $42 to $52.50 with a weighted average of $48.72, while Iowa/Southern Minnesota was down $.90 at $48.49 and the Western Corn Belt was $.87 lower at $48.48. Butcher hogs at the Midwest cash markets had no recent comparison at $30. Illinois direct sows were steady at $17 to $26 on good demand for moderate offerings. Barrows and gilts were firm at $27 to $35 with moderate demand and offerings. Boars ranged from $5 to $13.