Chicago | Reuters — Chicago Mercantile Exchange (CME) lean hog futures were mixed on Friday in choppy trading as investors weighed rising pork prices against weak cash hog values and rising concerns about pork exports to China.
Spread trading steered some contracts up sharply while others, including actively traded October and December futures, retreated.
“Spreads were driving the game today, and they especially pressed the spreads into the close,” said Top Third Ag Marketing analyst Craig VanDyke.
The hog market has been riled in recent days by worries that China would suspend all purchases of U.S. pork after months of speculation that sales to the world’s top hog and pork market would soar this year.
China is battling a severe outbreak of African swine fever that has decimated the country’s hog herd and sent domestic pork prices soaring.
The move by Beijing to suspend U.S. purchases came after U.S. President Donald Trump labeled the country a currency manipulator and vowed to slap more tariffs on Chinese goods next month if there is no progress toward a trade deal.
“It seems that the trade is kind of exhausted after the big moves that we had in the hog market and the monster headlines that we had,” VanDyke said.
CME October hogs ended the day down 0.9 cent at 66.975 cents/lb. (all figures US$).
August lean hogs settled 1.675 cents higher at 79.025 cents/lb. The contract narrowed its large discount to the CME lean hog index of 82.85. The two must converge by the futures contract’s expiration on Aug. 16.
U.S. pork prices remain strong, with the latest carcass cutout value at a two-year high of $90.44/cwt. Traders, however, said sales volumes have been lower than expected.
Live cattle futures were largely weaker on Friday, with only spot August futures posting a small gain as cash cattle prices held steady in weekly trade, while feeder cattle prices fell.
CME August live cattle were up 0.1 cent at 108.05 cents/lb. and October held steady at 106.75 cents/lb. Deferred contracts were 0.075 to 0.325 cent lower.
CME August feeder cattle ended 0.95 cent lower at 138.9 cents/lb. while September was down 1.425 at 138.45 cents/lb.
Livestock markets are also awaiting a U.S. Department of Agriculture grain supply-and-demand report due on Monday, which will offer price direction for livestock feed markets.
— Karl Plume reports on agriculture and ag commodities for Reuters from Chicago.