U.S. livestock: Hog futures slip on ample supplies, trade uncertainty

CME December 2019 lean hogs with 20-, 50- and 100-day moving averages. (Barchart)

Chicago | Reuters — U.S. lean hog futures fell on Tuesday, extending their latest slide to five straight sessions on uncertainty about U.S. pork exports to China, traders said.

Market bulls have been hoping for a U.S. trade deal with Beijing that could bolster U.S. pork sales to China, the world’s biggest pork consumer. China has ramped up meat imports globally over the last year as it struggles with African swine fever, a deadly animal disease that has devastated its hog herd, the world’s largest.

But hog futures sagged as prospects for a trade deal appeared to wane in recent days. U.S. President Donald Trump said Tuesday he would raise tariffs on Chinese imports if no deal is reached with Beijing to end the trade war. The next round of tariffs is due to start in mid-December.

“For a while, it looked like the doors were going to open and we would have a trade deal. (But) we have not really gotten positive news, and I think they (traders) are cutting back on some of their positions,” said Altin Kalo, agricultural economist for New Hampshire-based Steiner Consulting.

February lean hog futures on the Chicago Mercantile Exchange (CME) settled down 0.6 cent at 69.625 cents/lb. after falling to 68 cents, the contract’s lowest since Sept. 11 (all figures US$). Nearby December hogs ended down 0.6 cent at 62.150 cents/lb.

Softening wholesale pork prices underscored the need for robust export sales at a time of ample U.S. supplies, Kalo said. After the CME close, the U.S. pork cutout fell $4.47/cwt, driven by declines in prices for hams and bellies.

“That’s the nervousness in the hog market: whether these product prices are sustainable as we go past the peak holiday demand period,” Kalo said.

CME live cattle futures closed mostly lower as the market paused after a two-month rally. The benchmark February contract settled down 0.05 cent at 125.05 cents/lb., and CME January feeder cattle fell 0.45 cent to 144.025 cents/lb.

Traders await the U.S. Department of Agriculture’s monthly Cattle on Feed report on Friday.

— Julie Ingwersen is a Reuters commodities correspondent in Chicago.

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