CHICAGO, March 24 (Reuters) - U.S. live cattle futures settled up their expanded daily limit on Tuesday as traders continued to react to soaring profit margins for beef packers that should lift prices in the cash cattle market this week.
Retail demand for meat has surged as fears of the coronavirus prompt consumers to stock up on supplies, super-charging margins.
“The knee-jerk reaction in this coronavirus deal was to sell the livestock markets. They thought demand and cut-outs would fall drastically, and we saw the exact opposite. So the market is correcting itself,” said Joe Vaclavik, president of Standard Grain, a brokerage.
Profit margins for beef processors reached a record high of $611.10 per head of cattle on Tuesday, according to livestock marketing advisory service HedgersEdge.com. That was up from $580.70 on Monday and $317.10 a week ago.
Chicago Mercantile Exchange June live cattle futures settled up the expanded 4.5-cent daily limit at 97.025 cents per pound and CME’s May feeder cattle futures contract ended up 6.750 cents at 129.500 cents a pound.
The exchange will keep daily limits at 4.5 cents for live cattle futures and 6.750 cents for feeder cattle futures on Wednesday, except for the spot March feeder cattle contract, which expires this week. The CME this week expanded the daily limit for March feeders to 10 cents per pound “to ensure that trading is not restrained.”
CME lean hog futures closed higher but trailed the gains in cattle futures. The CME June lean hog futures settled up 2.050 cents at 73.000 cents per lb. Limits for lean hog futures will revert to 3 cents for Wednesday’s trade.
The U.S. pork cutout fell by $1.46 on Tuesday afternoon but cash hog prices in the Iowa and southern Minnesota market rose by $1.52, according to the U.S. Department of Agriculture. (Reporting by Julie Ingwersen; Editing by Richard Chang)