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US hog futures tumble in week 14

US lean hog futures on Monday sank by an expanded daily limit and cattle futures weakened on increased concerns that slaughterhouses will close due to the spread of the coronavirus.

31 March 2020, at 11:03am

Traders worry that COVID-19 shutdowns could back up supplies of livestock by removing markets for the animals.

Canada's largest hog producer, Olymel, on Sunday said it would shut a hog slaughter and cutting plant for two weeks after nine employees tested positive for the coronavirus.

"The decision was made partly to protect the workers, and partly to limit community transmission," Olymel said in a statement.

Chicago Mercantile Exchange April lean hog futures dropped the widened limit of 4.5 cents at 53.950 cents per lb. Most-active June lean hogs ended down 4.475 cents at 59.775 and set a life-of-contract low. Limits for hogs will remain at 4.5 cents for Tuesday's trading session.

Futures traders seem convinced that the coronavirus will disrupt US meat processing, said Dennis Smith, commodity broker for Archer Financial Services in Chicago.

"They seem to be dialling in a worst-case scenario going into the peak of this virus," he said

Weaker wholesale meat prices added pressure to futures, analysts said. The decline indicates that consumers may be scaling back hoarding at grocery stores after stocking their freezers with meat, they said.

The US pork cutout fell by $3.08, its fifth straight daily decline, according to USDA data.