Chicago | 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 said Monday it will rebuild the heavily damaged plant at the same site near Holcomb, Kansas, about 350 km west of Wichita. The plant “will be down indefinitely” following Friday’s fire, the company said.

The plant processed about 6,000 cattle per day, representing around five per cent of the total industry and a bit over 20 per cent 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 three cents at 105.05 cents/lb. (all figures US$). October also notched a limit-down move, sagging three cents to 103.75 cents.

CME August feeder cattle ended 4.5 cents lower at 134.4 cents/lb. while September was down 4.5 cents at 133.95 cents/lb.

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 0.1 cent at 67.075 cents/lb.

August lean hogs settled 0.15 cent higher at 79.175 cents/lb. 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 surging $2.93, to $93.37/cwt, its highest since Aug. 15, 2017.

— Mark Weinraub is a Reuters commodities correspondent in Chicago.

Tagged Beef Cattle, Cattle, cattle futures, closing markets, CME, feeder cattle, hog futures, hogs, Holcomb, Kansas, lean hog, live cattle, Pork, Swine, Tyson