U.S. livestock: Lean hogs lower on China tensions

CME live cattle futures mostly higher

CME July 2020 lean hogs with 20-, 50- and 100-day moving averages. (Barchart)

Chicago | Reuters — U.S. lean hog futures dropped by as much as the daily trading limit on Thursday on worries that rising tensions between Washington and Beijing could limit U.S. pork purchases by China, the world’s largest pork consumer.

Sino-U.S. relations have worsened as the White House has threatened China with sanctions over its handling of the coronavirus crisis and, most recently, over Beijing’s moves to tighten authority over Hong Kong.

China has dramatically ramped up imports of U.S. pork since last year after African swine fever killed nearly half of the country’s hogs and as Beijing worked to meet its Phase One trade deal commitments to boost purchases of U.S. farm goods.

“I’ve reined in my expectations for Chinese buying,” said Rich Nelson, chief strategist with Allendale Inc.

Continued concerns over hog supply chain disruptions and pork plant closures due to coronavirus infections among workers also weighed on prices, he added.

More than 3,000 U.S. meatpacking workers have tested positive for COVID-19 and at least 44 have died, the country’s largest meatpacking union said on Thursday.

Chicago Mercantile Exchange (CME) June lean hogs ended 3.25 cents lower at 56.925 cents/lb. (all figures US$). Most-active July futures traded limit-down but ended 3.65 cents lower at 55.65 cents/lb.

CME live cattle futures ended mostly higher, with nearby contracts lifted by their steep discount to cash cattle prices.

June live cattle settled 0.675 cent higher at 101.475 cents/lb., while actively traded August rose 0.45 cent to 101.175 cents/lb.

Cattle have traded at central and southern U.S. Plains feedlot markets this week from $113 to $120/cwt, about steady with a week ago but well above nearby futures prices.

Feeder cattle futures largely followed live cattle higher, with benchmark August futures up 1.425 cents at 135.5 cents/lb.

— Karl Plume reports on agriculture and ag commodities for Reuters from Chicago.

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