CHICAGO, March 6 (Reuters) - U.S. cattle futures sank to contract lows on Friday, extending a decline fueled by fears that the global coronavirus outbreak will slow economic growth and reduce demand for beef.
Losses in the market have accelerated as the virus has spread, with the most-active April live cattle futures contract down 17% in the past three weeks.
Financial markets view the virus, which causes a flu-like illness, as the catalyst that could interrupt the longest economic expansion on record, now in its 11th year. Traders fear such a disruption would hurt demand for beef, which is generally more expensive than pork and chicken.
“The market is now believing and pricing in the idea that the economy will be hit from the virus,” said Rich Nelson, chief strategist for commodity broker Allendale in Illinois.
“Beef is the premium protein and is a bit more tied to the economy.”
April live cattle tumbled 2.900 cents to 105.750 cents per pound at the Chicago Mercantile Exchange. June live cattle, the second-most-active contract, fell 2.625 cents to 100.025 cents per pound. April feeder cattle sank 3.600 cents to 130.050 cents per pound.
Weakness in the cash market, heavier cattle weights and bigger-than-expected slaughtering numbers added pressure to prices, traders said. Cash cattle this week traded at $113 per cwt in Kansas and Texas, down $2 from last week, they said.
Meat processors slaughtered an estimated 609,000 cattle this week, up from 602,000 cattle a week ago and 584,000 cattle a year earlier, according to U.S. Department of Agriculture data. They killed 2.47 million hogs, up slightly from last week and from 2.36 million a year ago.
In the pork market, the most-active April lean hogs contract settled up 0.550 cent at 65.925 cents per pound and reached its highest since Feb. 21.
Traders continue to hope for increased buying by China, the world’s largest pork consumer, as it grapples with an outbreak of a fatal pig disease that has decimated its herd.
“They are completely waiting on a China buying story,” Nelson said.
Leading German meat processor Toennies reported increased sales, with the company benefiting from rising demand from Asia, especially China.
Estimated margins for U.S. meat processors rose to $116.25 per head for cattle from $112.95 on Thursday and $55.30 a week ago, according to livestock marketing advisory service HedgersEdge.com. Margins for pork packers increased to $24.65 per head for hogs from $23.25 on Thursday and $20.90 last week. (Reporting by Tom Polansek in Chicago; editing by Jonathan Oatis)