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Cattle Markets Experience Losses Amid Coronavirus Fears

26 February 2020

CME live and feeder cattle futures fell sharply for a second consecutive day as fears of a coronavirus pandemic raised concerns about slowing demand and stifled global economic growth.

According to reporting from Reuters, commodities funds liquidated more of their sizable long holdings in cattle after the US Centers for Disease Control and Prevention said Americans should begin to prepare for community spread of the virus.

The spread of the virus that has infected some 80,000 people worldwide and killed more than 2,600 could dampen economic growth and slow restaurant traffic, which would hurt demand for beef more acutely than items like pork and chicken, analysts said.

"The market is suffering from the 'get-me-out' mentality. At any cost, funds are liquidating their long cattle positions, with the stock market down 5 percent to 6 percent in two days," said Jeff French, analyst with Top Third Ag Marketing in Chicago.

"(A futures drop of) $7 in four trading sessions is overdone, but if the stock market continues to liquidate, it's going to take cattle with them," he said.

The jitters spilled into the cash market as well. Traders said "several thousand" feedlot cattle in Kansas traded at $115 per cwt, a $5 drop from last week.

The decline came despite seasonally tight supplies of cattle and after the US Department of Agriculture on Monday reported a drop in frozen beef supplies in cold storage from a year earlier.

Benchmark Chicago Mercantile Exchange (CME) April live cattle futures ended down 2.3 cents at 112.950 cents per pound, the contract's lowest since 11 September, 2019. CME April feeder cattle dropped 3.475 cents to 134.125 cents per pound.

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