U.S. livestock: CME hogs slump again on cash prices, trade war threat

Chicago | Reuters –– Chicago Mercantile Exchange lean hogs fell on Friday for a second straight day, hit by recent cash hog price weakness and mounting worries about a potential trade war between the U.S. and China, traders said.

Beijing said Friday it was considering imposing an additional tariff on U.S. products including an extra 25 per cent duty on pork. The U.S. exports roughly one quarter of the pork it produces.

In January U.S. pork exports to China/Hong Kong totaled 31,997 tonnes, down 16 per cent from a year ago, largely due to increased production there, according to the U.S. Meat Export Federation. “Tariffs are driving the news today in the marketplace,” said Rosenthal Collins broker James Burns.

To some traders prices for slaughter-ready, or cash, hogs may be of greater significance than the tariff issue because the Chinese have not been a major buyer of U.S. pork for some time, he said.

Packers balked at paying more for hogs as supplies begin to build seasonally due to warmer spring weather that allows pigs to gain weight faster.

Investors are monitoring domestic pork demand as grocers finalize Easter ham purchases while stocking meat cases to accommodate spring grilling demand. April hogs closed down 2.9 cents/lb. at 58.425 cents (all figures US$). May finished 2.925 cents lower at 65.225 cents.

Cattle retreat before report

CME live cattle futures sank to a four-month low led by weaker wholesale beef prices and investor caution before the U.S. Department of Agriculture monthly Cattle on Feed report at 2 p.m. CT, said traders.

Analysts polled by Reuters, on average, believe 4.2 per cent more cattle entered U.S. feedlots last month than a year earlier.

CME live cattle absorbed this week’s disappointing prices for market-ready, or cash, cattle and the prospect of burdensome supplies ahead, said traders.

This week packers paid $125-$126/cwt for cash cattle in the U.S. Plains that a week earlier fetched $126-$128.

Processors paid less for cattle in anticipation of increased supplies in the coming months, while supermarkets stocked up on beef to feature after the Lenten season, said analysts and traders.

April live cattle closed 2.1 cents/lb. lower at 116.05 cents, and June ended 2.2 cents lower at 106.2.

CME feeder cattle futures tracked lower live cattle contracts. March feeders ended 1.825 cents/lb. lower at 135.7 cents.

— Reporting for Reuters by Theopolis Waters in Chicago.

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