March 9, 2020 / 10:05 PM / a month ago

LIVESTOCK-U.S. cattle futures dive, led by energy, equity markets

CHICAGO, March 9 (Reuters) - U.S. live cattle futures fell on Monday for a third straight session and hit life-of-contract lows following a plunge in crude oil and equity markets amid fears of a global recession, traders said.

“When you have the stock market losing 5% to 7% of its value in a day, that type of stuff is going to spill over into the cattle, and that is what we saw today,” said Jeff French, analyst with Top Third Ag Marketing.

Chicago Mercantile Exchange April live cattle settled down 2.900 cents at 102.850 cents per pound after falling the daily 3-cent limit to 102.750 cents, a contract low.

CME April feeder cattle settled down their limit of 4.500 cents to end at 125.550 cents per pound. Daily limits for feeder cattle futures will widen to 6.750 cents for Tuesday’s trade, the exchange said.

Crude oil prices suffered their biggest daily rout since the 1991 Gulf War as top producers Saudi Arabia and Russia began a price war that threatens to overwhelm global oil markets with supply. At the same time, the rapid spread of coronavirus stoked fears of a recession, and the Dow Jones Industrial Average fell more than 2,000 points, nearly 8%.

Along with spillover weakness from Wall Street, cattle markets faced a threat of reduced consumer demand for pricey cuts of beef.

“It’s blown out of proportion, but in Chicago, just look at the business meetings that have been canceled. That’s steak dinners that they (attendees) are not going to get,” French said.

“If consumers are feeling like they are losing money in the stock market and they are penny-conscious, beef is the most expensive protein out there,” French said.

CME lean hog futures also declined, with the benchmark April contract snapping a five-session rally. April hogs settled down 2.925 cents at 63.000 cents per pound after falling the daily 3-cent limit to 62.925 cents.

“The hogs just got caught up in the sell-off,” French said.

Reporting by Julie Ingwersen in Chicago Editing by Matthew Lewis

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