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CME update: cattle futures sink by their daily limits on coronavirus worries

02 April 2020

US cattle futures post limit losses on 1 April as more stringent coronavirus emergency measures slam stock markets and stoke worries of a global recession.

According to reporting from Reuters, live cattle futures dropped for the fourth time in five sessions, undoing all of the previous gains. The fall was attributed to President Trump’s announcement of extended coronavirus emergency measures through the end of April.

Mounting restaurant closures and stay-at-home orders have hammered livestock prices as traders weighed burdensome meat supplies against a downturn in demand and livestock supply chain disruptions.

"This drop was coronavirus related. Specifically, it was the White House news conference on Tuesday creating an environment where the market had to re-evaluate what the supply/demand was going to be moving forward," said Mike Zuzolo, president of Global Commodity Analytics.

"This was wide risk-off selling and computer trading throwing in the towel. We hit sell stops and other triggers," he said.

CME April live cattle fell to 97.325 cents per pound, while actively-traded June futures finished at 87.575 cents, both down by their expanded 4.5-cent daily limit. All other live cattle contracts, except for thinly traded August 2021 futures, also ended limit-down.

All feeder cattle contracts fell by their daily 4.5-cent limit as well, with actively traded May futures ending at 118.400 cents a pound.

The trading limit for live cattle will remain at the expanded 4.5 cents on Thursday, while the feeder cattle limit will increase to 6.75 cents, according to the CME Group.

Sharply lower cash market prices kept pressure on futures as key beef market indicators continued to dive amid coronavirus-fuelled demand uncertainty.

A limited number of cattle traded at least $4 per cwt lower on the closely followed weekly online fed cattle exchange on Wednesday.

The choice boxed beef cutout value plunged to $235.17 per cwt on Wednesday, down nearly $8 from the previous day, according to the USDA.

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