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U.S. livestock: Profit-taking, renewed trade fears drop CME hogs

(Regis Lefebure photo courtesy ARS/USDA)

Chicago | Reuters — Chicago Mercantile Exchange hog futures on Monday reversed Friday’s advances, hit by profit-taking and renewed concerns over U.S. exports following late last week’s contentious G-7 summit, said traders.

Europe will implement counter-measures against U.S. tariffs on steel and aluminum just like Canada, German Chancellor Angela Merkel said on Sunday, voicing regret about President Donald Trump’s abrupt decision to withdraw support for a G7 communique.

“It’s uncertainty over trade that’s dragged everything down from grain to livestock,” a trader said.

Last Friday, CME hogs finished up sharply after the Mexican government said it would import some U.S. pork duty-free under an import quota despite retaliatory measures taken earlier in the week after Washington hit Mexico with higher steel and aluminum tariffs.

CME hogs drew more pressure from fund liquidation and future’s premium to the exchange’s hog index for June 7 at 74.57 cents (all figures US$).

Thinly-traded June hogs, which will expire on Thursday, was supported by Monday’s higher wholesale pork values and rising prices for market-ready, or cash, hogs.

Packers hiked hog bids amid seasonally tight supplies as hot weather in parts of the U.S. Plains slow animal weight gains, said analysts and traders.

Ribs and pork chops are being featured by supermarkets and restaurants for spring barbecues and Father’s Day on June 17, they said.

June hogs closed up 0.275 cent/lb. at 80.15 cents. Most actively-traded July ended 1.325 cents lower at 79.4 cents. August finished 1.575 cents lower at 75.55 cents.

Cattle fall from highs

CME live cattle closed lower on risk-off trading and worries about a looming supply buildup, which pared early-session gains spurred by Friday’s strong cash prices, said traders.

“Grains started the risk-off type of trade. And we still haven’t figured out if we’re going to be able to absorb all this meat coming at us in the summer,” said U.S. Commodities president Don Roose.

On Friday market-ready, or cash, cattle in the U.S. Plains brought $114-$115/cwt, up from mostly $110 the week before.

Processors competed for supplies, encouraged by their still historically high margins while filling pre-booked retail meat orders, said analysts and traders.

June live cattle closed down 1.375 cents/lb. at 108.65 cents. August ended 1.6 cents lower at 104.175 cents.

Technical buying and lower live cattle futures undercut CME feeder cattle contracts.

August closed down 1.325 cents/lb. at 145.95 cents.

Reporting for Reuters by Theopolis Waters in Chicago.

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