Chicago | Reuters — Chicago Mercantile Exchange lean hog futures tumbled on Friday, with the benchmark October contract falling its daily three-cent limit after China announced a fresh set of tariffs on U.S. agricultural products, traders said.

China will levy extra 10 per cent tariffs on U.S. beef and pork from Sept. 1, its commerce ministry said, the latest retaliatory measure aimed at the U.S. farm sector whose voters helped elect President Donald Trump in 2016.

The moves dimmed hopes for a jump in U.S. pork exports at a time of burdensome supplies.

“Hog supplies have started to ratchet higher. Cash hog prices are lower, there is no positive news on the tariff front, (and) export sales were weak. So everywhere you look, things were not positive,” said Altin Kalo, agricultural economist for New Hampshire-based Steiner Consulting.

CME October lean hogs settled down the daily maximum of three cents at 59.3 cents/lb., near the contract low of 58.2 cents (all figures US$).

The CME Group said daily trading limits for lean hog futures would widen to 4.5 cents/lb. for Monday’s trading session.

Cash hog prices in the closely watched Iowa and southern Minnesota market fell $1.59 on Friday, and the pork cutout fell 29 cents, according to the U.S. Department of Agriculture (USDA).

A year-long epidemic of African swine fever has slashed China’s massive pig herd, the world’s largest, by one-third, according to official data, pushing prices of the country’s favourite meat to a new record.

China’s pork imports more than doubled in July from the same month a year earlier, customs data showed. But China’s tariffs on pork from the U.S. are restricting supplies from one of its top suppliers.

The intensifying trade war also pressured CME cattle futures, which closed lower on Friday for the first time all week as recession worries swirled on Wall Street. Poor economic conditions tend to discourage consumers from buying pricey cuts of meat.

“It’s never good for the beef market when the macro picture deteriorates. If the likelihood of a recession increases, it’s terrible for beef. It affects the food service business,” Kalo said.

CME October live cattle futures settled down 1.7 cents at 99.4 cents/lb., and October feeder cattle fell 2.95 cents at 132.525 cents/lb.

Until Friday, live cattle futures had been firming this week as strong wholesale beef prices lifted packer margins and drove up demand for live cattle.

However, wholesale beef prices retreated Thursday from two-year highs and fell again on Friday, a bearish signal.

USDA late Thursday quoted choice boxed beef cutout at $239.28/cwt, down $2.46 from Wednesday’s two-year peak, and on Friday’s morning report, prices were down another $1.40, to $237.88/cwt.

— Julie Ingwersen is a Reuters commodities correspondent in Chicago.