Chicago | Reuters — Hopes for progress in talks to resolve the U.S.-China trade war lifted Chicago Mercantile Exchange lean hog futures on Friday, traders said.
Wall Street and commodities advanced after Bloomberg, citing people familiar with the matter, reported that China offered to go on a six-year buying spree to ramp up imports from the U.S. in order to reconfigure the relation between the world’s two biggest economies.
Beijing imposed duties on imports of U.S. pork, soy and other farm products last year, part of tit-for-tat tariffs that have disrupted hundreds of billions of dollars of commerce. U.S. pork exports to China suffered as a result, but a trade deal could help to increase shipments.
“We’re adding some risk premium back for a three-day weekend in case something develops with the trade,” said Don Roose, president of Iowa-based broker U.S. Commodities. “There continues to be more positive type of rhetoric going on.”
CME February lean hogs advanced 0.375 cent, to 61.225 cents/lb. (all figures US$). Most-active April hog futures gained 1.65 cents, to 66.275 cents.
U.S. agricultural markets will be closed on Monday for the Martin Luther King Jr. Day holiday.
In cattle futures, traders remained focused on a winter storm expected in the U.S. Plains this weekend that could slow weight gains and impact shipments of cattle to slaughterhouses.
Concerns about the winter storm were already factored into the front-month cattle contract, Roose said. This prompted traders to sell the nearby contract and buy deferred contracts as they unwound recent spread trades, he said.
The storm should bring five to 20 cm of snow from South Dakota to northern Ohio, with up to 25 cm in northern Iowa, according to National Weather Service maps.
“Everybody’s talking about this winter weather,” said CattleHedging.com president Larry Hicks.
Technical selling weighed on the front-month February contract, Hicks said.
CME February live cattle finished 0.575 cent lower at 126.525 cents/lb. and most-active April cattle rose 0.475 cent to 127.375 cents. Both contracts set life-of-contract highs on Wednesday.
CME March feeder cattle fell to the lowest since Jan. 7, settling 0.1 cent lower at 142.825 cents/lb.
— Tom Polansek reports on agriculture and ag commodities for Reuters from Chicago.