Chicago | Reuters — U.S. lean hog futures closed lower on Monday as optimism over export demand began to cool, and live cattle futures fell as pressure from slumping cash prices continued to weigh on the market, traders said.
Benchmark April lean hog futures on the Chicago Mercantile Exchange (CME) settled down 1.175 cents at 65.075 cents/lb. (all figures US$).
Chinese President Xi Jinping told U.S. President Donald Trump that China would meet its Phase One trade deal purchasing targets despite delays linked to the coronavirus, White House adviser Larry Kudlow told Bloomberg Television.
But several traders cautioned that how much China may ultimately buy was still uncertain. Adding to bearish sentiment, the U.S. pork cutout fell last week, and cash hog prices in the closely watched Iowa and southern Minnesota market also dropped, according to USDA.
Meanwhile, CME lean hog futures were seen as having already priced out any risk premium tied to the coronavirus outbreak, said Don Roose, president of U.S. Commodities in West Des Moines, Iowa, who noted that the funds weren’t sitting on big long-positions.
CME live cattle futures closed lower in sympathy with lean hogs and on bearish technical signals, in the absence of fresh news from the cash cattle market.
“The cattle market continued to be under pressure from lower trades last week, and the outlook is that we will see trades even a bit lower this week,” Roose said.
While domestic beef demand has been strong, he said, exports are slowing and the sector is facing hefty cattle herd numbers going into March.
The wholesale choice boxed beef cutout value fell $1.21, to $208.91/cwt, on Monday afternoon, while select cuts dropped 19 cents, to $203.70/cwt, the U.S. Department of Agriculture said.
The CME benchmark April live cattle futures contract settled down 1.2 cents at 118.6 cents/lb. Front-month February slipped 1.025 cents to close at 120.3 cents.
CME March feeder cattle futures rose 0.5 cent to end at 135.7 cents/lb.
— Reporting for Reuters by P.J. Huffstutter in Chicago.