Chicago | Reuters — U.S. lean hog futures crumbled under the weight of large supplies and a lack of news about trade talks with China on Tuesday, while cattle futures also weakened.
The declines were a turnaround from Monday, when hog futures climbed on hopes for easing tensions in the trade war between Washington and Beijing.
China, the world’s largest pork consumer, imposed retaliatory tariffs on imports of U.S. pork and other farm products last year as part of the dispute, slashing U.S. agricultural exports.
“For the hogs, we just have too big a supply,” said Don Roose, president of Iowa-based broker U.S. Commodities. “The supplies are just overwhelming the demand.”
Chicago Mercantile Exchange (CME) October lean hogs settled 0.575 cent lower at 63.225 cents/lb. (all figures US$).
China has the potential to significantly increase pork imports if a trade deal is reached, according to analysts. Meat is needed to replace millions of pigs that have died in an outbreak of the fatal hog disease African swine fever in China over the past year.
China’s foreign ministry reiterated on Tuesday that it had not heard of any recent telephone call on trade between the United States and China, after U.S. Treasury Secretary Steven Mnuchin said there had been contact between the two sides.
“It’s a rocky path between the U.S. and China,” Roose said. “We haven’t seen anything from China that is solidifying something that seems really positive.”
In the cattle markets, beef packing margins remained high following a fire that suspended operations at a Tyson Foods slaughterhouse in Kansas earlier this month.
Margins were $423.70 per head, up from $132.90 two weeks ago, according to livestock marketing advisory service HedgersEdge.com.
Packers slaughtered an estimated 117,000 cattle on Tuesday, up 1,000 from a week ago, according to the U.S. Department of Agriculture. They have killed 233,000 cattle so far this week, up from 231,000 last week and down from 240,000 a year ago.
Prices for choice boxed beef cutout edged up three cents, to $238.09/cwt, while select cutout fell 24 cents, to $211.42, USDA said.
CME October live cattle futures settled 1.225 cents weaker at 99.775 cents/lb. October feeder cattle dropped 1.875 cents, to 132.5 cents/lb.
— Reporting for Reuters by Tom Polansek in Chicago.