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Cattle futures rebound as grocery demand intensifies

20 March 2020

US livestock futures rose on Thursday as part of a broad recovery in the agriculture markets stemming from oil gains and export hopes.

According to reporting from Reuters, strong demand for meat in the retail sector underpinned the gains as the industry rushed to restock grocery stores after the coronavirus pandemic spurred heavy buying from consumers.

"There has been such a run on it at the supermarkets," said Doug Houghton, analyst with Brock Associates. "The pipeline is depleted on the retail end."

Traders also noted signs of strong export demand.

CME May feeder cattle futures contract rose the daily trading limit of 4.5 cents to close at 113.025 cents per lb. Feeder cattle contracts closed limit up across the board and will trade with expanded limits of 6.75 cents on Friday.

CME June live cattle futures were 3 cents higher at 88.925 cents per lb.

Demand for US meat at grocery stores will likely exceed supplies for at least another week, the chief executive of Tyson Foods Inc told Reuters on Thursday, as the coronavirus pandemic fuels panic buying among shoppers.

"Once we are able to replenish supplies, which is probably going to take another week or so, then I think that we'll be back in better equilibrium between supply and demand," Tyson CEO Noel White said in an interview.

He later added: "In the short term, being a matter of weeks, there are some imbalances that exist."

The "imbalances" are more demand than supply in sectors like retail stores, White said. The total amount of beef, pork and poultry available in the United States is up about 2% to 3% from last year, he said.

Orders for meat from grocery stores were significantly higher than usual through the weekend, after demand began to shift away from restaurants last week, White said.

"The demand hit very quickly," White said. "The order fill rate has improved. It's still not where we would expect it to be."

USDA's monthly cattle on feed report will be released on Friday at 2 PM CDT (1900 GMT). Analysts were expecting the report to show that February cattle placements were down 7.6 percent from year ago.

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