U.S. livestock: CME lean hogs rebound

Market eyes U.S.-China trade talks

hogs
(t-lorien/Getty Images)

Chicago | Reuters — U.S. lean hog futures closed out the week on a positive note on Friday as hopes for a pickup in pork sales to China fueled speculative buying that lifted prices more than one per cent and reversed the prior session’s losses.

The market remains focused on trade talks between the U.S. and China after a 90-day trade war truce was reached last weekend. That deal, according to the White House, included promises by Beijing to “immediately” purchase U.S. agricultural products, a list that is expected to include pork.

U.S. President Donald Trump wrote in a tweet on Friday morning that “China talks are going very well.”

China, the world’s largest hog and pork market, has lost large numbers of its domestic hog herd due to the highly contagious African swine fever that has been found on more than 70 farms across the country.

Chicago Mercantile Exchange February lean hogs settled up 0.975 cent at 67.875 cents per pound and April hogs added 1.05 cent, to 72.325 cents (all figures US$).

Rising cash hog prices late this week and strong packer margins also supported futures.

Cash hogs in the closely watched Iowa and southern Minnesota market were 80 cents/cwt higher on Friday and up $1.28 over the past two days, according to U.S. Department of Agriculture data.

The average packer margin on Friday swelled to $41.75 per head, up from $30.85 a week earlier, according to livestock marketing and advisory service HedgersEdge.

Live cattle futures closed mixed on Friday as the market awaited cash cattle trading at U.S. Plains feedlot auctions.

Cattle sellers were holding out for prices higher than last week’s $117-$118/cwt sales, although packer bids on Friday afternoon remained around $116 against offers of $119-$120, traders said.

Headwinds from concerns about a slowing economy possibly blunting beef demand anchored live cattle prices in general.

Wall Street’s main indexes fell sharply on Friday and posted their largest weekly percentage drops since March.

CME February live cattle futures settled down 0.275 cent at 121.525 cents/lb. while April cattle rose 0.15 cent, to 123.625 cents.

Feeder cattle futures were also mixed, with gains capped by rising corn feed prices, which rose by about two per cent this week.

January feeder cattle settled up 0.175 cent at 144.375 cents while March feeders ended down 0.075 cent at 141.875 cents.

— Karl Plume reports on agriculture and ag commodities for Reuters from Chicago.

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