CHICAGO, Feb 25 (Reuters) - Chicago Mercantile Exchange live and feeder cattle futures fell sharply for a second consecutive day on Tuesday as fears of a coronavirus pandemic stoked concerns about demand and slower global economic growth.
Commodities funds liquidated more of their sizable long holdings in cattle after the U.S. Centers for Disease Control and Prevention said Americans should begin to prepare for community spread of the virus.
The spread of the virus that has infected some 80,000 people worldwide and killed more than 2,600 could dampen economic growth and slow restaurant traffic, which would hurt demand for beef more acutely than items like pork and chicken, analysts said.
Stocks and oil prices tumbled and the benchmark U.S. debt yield hit a record low on Tuesday.
“The market is suffering from the ‘get-me-out’ mentality. At any cost, funds are liquidating their long cattle positions, with the stock market down 5% to 6% in two days,” said Jeff French, analyst with Top Third Ag Marketing in Chicago.
“(A futures drop of) $7 in four trading sessions is overdone, but if the stock market continues to liquidate, it’s going to take cattle with them,” he said.
The jitters spilled into the cash market as well. Traders said “several thousand” feedlot cattle in Kansas traded at $115 per cwt, a $5 drop from last week.
The decline came despite seasonally tight supplies of cattle and after the U.S. Department of Agriculture on Monday reported a drop in frozen beef supplies in cold storage from a year earlier.
Benchmark Chicago Mercantile Exchange (CME) April live cattle futures ended down 2.3 cents at 112.950 cents per pound, the contract’s lowest since Sept. 11, 2019. CME April feeder cattle dropped 3.475 cents to 134.125 cents per pound.
CME lean hog futures ended mixed as prices stabilized after Monday’s steep drop and investors looked ahead to potential pork demand from China, which has been importing more meat over the past year to bolster tight domestic supplies.
April lean hogs ended 0.050 cent higher at 64.675 cents per pound, while June futures were down 0.250 cent at 79.700 cents. (Reporting by Karl Plume and Julie Ingwersen in Chicago; Editing by Richard Chang)
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