U.S. livestock: Lean hogs tumble on worsening U.S.-China trade ties

Chicago | Reuters — Chicago Mercantile Exchange (CME) lean hog futures fell sharply on Tuesday as growing tensions between Washington and Beijing fueled worries about U.S. pork exports.

China, the world’s largest hog and pork market, has threatened to halt all purchases of U.S. agricultural products after U.S. President Donald Trump announced he would slap a 10 per cent tariff on a further $300 billion in Chinese imports starting on Sept. 1 (all figures US$).

China had been expected to ramp up pork imports this year, including from the United States, as African swine fever has killed off a large share of China’s hog herd.

“We built premiums up in the deferred (futures contract) months on expected Chinese demand, and now that’s been taken away. Now we’re looking at really big hog supplies,” said Doug Houghton, analyst with Brock Associates Inc.

“Without China it’s going to be difficult to reach those (export) numbers so we just have more pork going into the domestic market,” Houghton said.

CME August lean hog futures settled 0.725 cent lower at 77.125 cents/lb. Most-active October hogs, which touched an 11-1/2 month low on Monday, ended the day down 2.825 cents at 64.6 cents/lb., the contract’s sixth decline in seven sessions.

Cash hog prices in the closely followed Iowa and southern Minnesota market traded 61 cents/cwt lower on Tuesday, with the average price down nearly $9/cwt from a week ago amid ample supplies of animals.

Live cattle futures also fell on Tuesday amid spillover pressure from hogs, while feeder cattle ended mixed.

CME August live cattle futures ended the day down 0.675 cent at 107.125 cents/lb. October live cattle declined 1.175 cents to 106.225 cents/lb. after breaching chart support at its 50-day moving average.

CME August feeder cattle dropped 0.55 cent to 139.975 cents/lb. Actively traded September feeders rose 0.05 cent to 139.45 cents/lb.

— Reporting for Reuters by Karl Plume in Chicago.

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