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Cattle Futures Plunge After Fire Shutters Tyson Plant
By Mark Weinraub
CHICAGO, Aug 12 (Reuters) - Chicago Mercantile Exchange cattle futures dropped their daily trading limits on Monday after a fire at a major beef plant threatened to limit demand for the animals for months, traders said.
Live cattle prices settled at their lowest since July 3 while feeder cattle contract dropped to their lowest since June 28.
U.S. meat processor Tyson Foods Inc said on Monday it will rebuild the heavily damaged Kansas plant, which would be down "indefinitely" following Friday's fire. The plant processed about 6,000 cattle per day, representing around 5% of the total industry and a bit over 20% of Tyson's capacity, J.P. Morgan analyst Ken Goldman said. He estimated the plant will be shut for months.
"There simply is not any way to soften the blow," Hales Trading Co said in a note to clients. "It will have an exceedingly bearish impact of fed cattle prices and then on feeder cattle prices as well."
CME August live cattle ended down 3 cents at 105.05 cents per pound. October also notched a limit down move, sagging 3 cents to 103.75 cents.
CME August feeder cattle ended 4.5 cents lower at 134.400 cents per pound while September was down 4.5 cents at 133.95 cents per pound.
Both the live cattle and feeder cattle contracts will trade with expanded limits on Tuesday following the limit moves. Live cattle's new limit will be 4.5 cents while feeder cattle contracts will have a limit of 6.75 cents.
Lean hog futures were ended firm, with the market supported by strength in pork prices.
Concerns about demand from China amid the ongoing trade fight with the United States and the spread of African swine fever limited the buying.
CME October hogs ended the day up 0.100 cent at 67.075 cents per pound.
August lean hogs settled 0.15 cent higher at 79.175 cents per pound. The contract narrowed its large discount to the CME lean hog index of 82.33. The two must converge by the futures contract's expiration on Aug. 16.
U.S. pork prices remain strong, with the latest carcass cutout value <PRK-MAN-CARCS> surging $2.93 to $93.37 per cwt, its highest since Aug. 15, 2017. (Reporting by Mark Weinraub Editing by Marguerita Choy)
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