U.S. livestock: Hog futures jump on U.S.-China trade hopes

june hogs
CME June 2019 lean hogs with Bollinger (20,2) bands. (Barchart)

Chicago | Reuters — U.S. lean hog futures jumped more than two per cent on Tuesday in a second straight day of strong gains fueled by hopes that U.S.-China trade talks would revive Chinese demand for American pork, traders and analysts said.

Bargain buying further propelled gains after benchmark April futures dropped for four straight sessions last week and touched a seven-month low on early on Monday before closing higher.

U.S. and Chinese officials have expressed hopes that the new round of talks, which began in Beijing on Monday, would bring them closer to easing their nearly year-long trade war. The optimism pushed global stock markets higher and rallied prices of several key commodities, including hogs and soybeans.

“With the ongoing trade talks this week, there’s an undercurrent of optimism right now that progress on a trade deal will be made,” said Matthew Wiegand, broker with FuturesOne.

“There’s a presumption that any deal would require increased Chinese imports of U.S. goods. And being the pork consumers that they are, that would naturally favour U.S. pork,” he said.

U.S. pork exports to China have slumped as Beijing raised tariffs on shipments last year in retaliation for U.S. duties on Chinese goods. Pork packers and hog farmers are hoping that China would accelerate purchases this year as African swine fever has decimated the country’s hog herd.

The hog market has also been pressured for weeks by abundant supplies and declining cash market prices for both hogs and pork.

The actively traded Chicago Mercantile Exchange April contract ended up 1.25 cents at 60.325 cents/lb., while June futures gained 1.575 cents to end at 77.225 cents (all figures US$).

Live cattle futures ended mostly lower in a profit-taking setback, reversing the prior session’s gains as traders await price direction from cash feedlot cattle markets.

Beef packers late on Friday and on Saturday bought cattle in the southern U.S. Plains at $125/cwt, up about $1 from deals in the previous week.

Bids on this week’s showlist were not well-established on Tuesday, with cattle priced at around $127 or more.

CME April live cattle settled down 0.425 cent at 127.875 cents/lb. CME March feeder cattle futures fell 0.275 cent, to 144.4 cents/lb.

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

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