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U.S. livestock: Hog futures extend slide on China trade worries

Live cattle close mostly higher

Chicago | Reuters — U.S. lean hog futures fell on Monday for a fourth straight session, with deferred contracts leading the way down on worries about the chances for a U.S.-China trade deal that could boost Chinese imports of U.S. pork, traders said.

Most-active February lean hog futures on the Chicago Mercantile Exchange (CME) settled down 1.775 cents at 70.225 cents/lb. after dipping to 69.775 cents, the contract’s lowest since Sept. 11 (all figures US$). Nearby December hogs ended down 0.45 cent at 62.75 cents/lb.

Grains, crude oil and Wall Street equities were pressured along with hog futures after CNBC reported that the mood in Beijing about a trade deal was pessimistic due to President Donald Trump’s reluctance to roll back tariffs.

Earlier, Chinese state media had said Washington and Beijing held “constructive talks” on trade in a high-level phone call on Saturday that included Vice-Premier Liu He, U.S. trade representative Robert Lighthizer and Treasury Secretary Steven Mnuchin.

“The longer this thing goes on, the more disappointed the bulls are becoming, and the enthusiasm is just bleeding out of the market,” said Dan Norcini, an independent livestock trader.

“It looks to me like these guys are putting less and less prospects on very large purchases of U.S. pork by China,” Norcini added.

The U.S. hog industry is hoping for increased pork exports as China grapples with a fatal pig disease that has killed up to half its herd since August 2018. China is the world’s largest hog producer and pork consumer.

Sales to China are being hampered, though, by steep tariffs that Beijing imposed on imports of U.S. pork last year as part of the countries’ trade war.

“We’ve got a premium built into the market in anticipation of a big trade deal with China,” said Don Roose, president of Iowa-based U.S. Commodities. “We had reports that we are still stumbling along with the trade deal. The uncertainty is leading to liquidation,” Roose said.

Cattle futures edge higher

CME live cattle futures closed mostly higher, with the benchmark February contract settling up 0.125 cent at 125.1 cents/lb. January feeder cattle rose 0.2 cent at 144.475 cents/lb.

Traders await the U.S. Department of Agriculture’s monthly cattle-on-feed report on Friday.

Tyson Foods plans to resume operations at its beef slaughterhouse near Holcomb, Kansas, in the first week of December following an Aug. 9 fire that severely damaged the facility, the company said in a statement on Monday.

The Holcomb plant is expected to be fully operational by the first week of January, Tyson said. The plant killed about 6,000 cattle a day, or five per cent of the total U.S. slaughter, prior to the fire.

— Julie Ingwersen is a Reuters commodities correspondent in Chicago.

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