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U.S. livestock: Hog futures extend setback on trade tensions

Live cattle market seen as technically oversold

Chicago | Reuters — U.S. lean hog futures touched their lowest prices in about two months on Tuesday on concerns over elevated trade tensions between Washington and Beijing.

Traders are worried that a resolution to the U.S.-China trade war may be farther off than previously expected, after U.S. President Donald Trump’s surprise statement on Sunday that he would raise tariffs on $200 billion worth of Chinese goods to 25 per cent from 10 per cent (all figures US$).

U.S. pork producers want an end to the dispute because China’s purchases of U.S. pork have slowed since Beijing raised duties on imports from the U.S. to 62 per cent last year.

Still, China will need to increase total pork imports to compensate for hogs killed in an outbreak of African swine fever, analysts said. The disease, which is fatal for hogs but does not affect humans, is expected to wipe out tens of millions of pigs in China, the world’s top hog producer.

China’s increased demand should generally underpin hog futures going forward, analysts said.

“African swine fever is expected to dramatically tighten global meat supplies, regardless of whether we have a trade deal or not,” said Arlan Suderman, chief commodities economist for INTL FCSTone.

June lean hogs ended down 0.5 cents at 89.25 cents/lb. at the Chicago Mercantile Exchange (CME), after dropping by the three-cent daily trading limit on Monday.

July lean hog futures closed down 0.55 cent at 92.125 cents, after also falling by the daily limit on Monday.

CME will reinstate the three-cent limit for trading on Wednesday after temporarily expanding it to 4.5 cents on Tuesday.

Live cattle futures traded mostly higher, with traders saying the market was technically oversold.

June live cattle ended flat at 112.275 cents/lb. August cattle rose 0.675 cent, to 109.075 cents/lb.

August feeder cattle advanced 1.25 cents, to 145.6 cents/lb., while September was up 0.925 cent at 146.475 cents.

— Tom Polansek reports on agriculture and ag commodities for Reuters from Chicago.

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