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Cattle futures hit multi-month low amid coronavirus fears

27 January 2020

On Friday, US live and feeder cattle futures hit their lowest prices in months amid fears of the coronavirus spreading.

According to reporting from Reuters, the sell-off hit also hit hog futures and crude oil as investors moved into safe-haven assets. 

Developments in the spread of the coronavirus will likely continue to direct cattle futures on Monday, said Rich Nelson, chief strategist for Illinois-based commodities broker Allendale.

Concerns increased as US health officials confirmed a second US case of the coronavirus and France confirmed its first three cases, while Chinese authorities sought to contain an outbreak that has killed at least 41 people in the country and infected about 1,000.

"I don't know how much pressure we should have seen due to the coronavirus but based on psychology, it fits," Nelson said.

April live cattle futures reached their lowest price since October 31 before ending up 0.125 cent at 124.300 cents per pound at the Chicago Mercantile Exchange. CME March feeder cattle futures dropped 0.850 cent to 139.675 cents per pound and touched their lowest level since November 22.

The USDA, in a monthly report issued after the close of trading, said the nation had 12 million head of cattle on feed for slaughter as of January 1, up 2.3 percent from a year earlier. A Reuters poll of 10 analysts had projected an increase of 2.2 percent.

The USDA said 1.83 million head were placed in feedlots during December, up 3.5 percent from the previous year. Analysts were expecting an increase of 3.4 percent.

The data was "neutral across the board," Nelson said.

Uncertainty about Chinese demand for US meat continues to hang over the livestock markets.

Beijing pledged to increase imports of US agricultural products in a trade deal signed last week that is meant to reduce tensions after nearly two years of a tit-for-tat tariff war. Traders are unsure about the timing and scale of future Chinese purchases, though.

China needs to further boost meat imports after an outbreak of a fatal pig disease, African swine fever, decimated its herd.



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