U.S. livestock: Hogs rally again, cattle up on cash strength

CME April 2020 live cattle with 20-, 50- and 100-day moving averages. (Barchart)

Chicago | Reuters — U.S. hog futures rose to their highest in 3-1/2 weeks on Wednesday as traders anticipated a long-awaited boost to demand from China, a day after the world’s top pork consumer announced it would grant exemptions to tariffs on U.S. imports.

“We don’t know what the quantities will be,” said Mike Sands, an independent U.S. livestock market analyst. “But having those tariffs relaxed via waivers is pretty critical to seeing pork exports to China escalate.”

The hog market rallied 2.1 per cent on Tuesday after China’s announcement and traders noted follow-through buying on Wednesday, with the most-active April futures contract adding another 3.2 per cent.

Chicago Mercantile Exchange April lean hog futures rose 2.075 cents to settle at 67.575 cents/lb., its fourth straight day of gains (all figures US$). Prices peaked at their highest since Jan. 24.

Cattle futures also were higher, led by strength in the cash market. Benchmark CME April live cattle futures settled up 0.2 cent at 120.8 cents/lb.

The contract broke through its 20-day moving average for the first time since Jan. 21. It closed near its session peak but faced resistance near Friday’s high of 121.175 cents for the second day in a row.

CME March feeder cattle futures gained 1.475 cents to close at 140.775 cents/lb.

Traders said fed cattle in Texas traded at $120/cwt, up $1 from last week.

Analysts estimated a monthly U.S. Agriculture Department report on Friday will state the amount of cattle in U.S. feedlots as of Feb. 1 was 102.4 per cent of the February 2019 total.

— Mark Weinraub is a Reuters commodities correspondent in Chicago; additional reporting by Julie Ingwersen and Tom Polansek.

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