Chicago | Reuters — U.S. hog futures rose on Monday as traders were relieved President Donald Trump had called off plans to impose tariffs on imports of Mexican goods, which means no retaliatory duties by Mexico on U.S. products like pork.
Live cattle futures rose by the daily price limit.
Traders remained on edge about the risk for further disruptions to pork shipments because the U.S. exports more than 20 per cent of the pork it produces. Mexico bought about $1.5 billion worth of U.S. hams and other pork products in 2017, making it the sector’s top export market by volume (all figures US$).
China and Mexico separately implemented tariffs on imports of U.S. pork last year, slowing sales. China’s tariffs remain in place, while Mexico lifted its tariffs after Washington removed duties on imports of Mexican steel last month.
Hog futures fell about four per cent last week as traders worried that escalating trade tensions would push Mexico to slap new duties on U.S. pork.
“This is a valid rebound,” said Rich Nelson, chief strategist for Illinois-based broker Allendale.
CME July lean hogs climbed 2.85 cents, to 86.2 cents/lb. August hogs jumped 2.225 cents, to 84.85 cents per pound.
Trump had threatened five per cent tariffs on Mexican goods to be imposed on Monday, unless Mexico restricted illegal immigration from Central America into the U.S. On Friday, he called off the tariffs, after the U.S. and Mexico announced an agreement on immigration.
Trump also said Mexico had agreed to “immediately begin” buying “large quantities” of agricultural goods from U.S. farmers.
Traders shrugged off those comments.
“There’s so many questions,” Nelson said. “I am not going to get too excited about it.”
The National Pork Producers Council, a U.S. industry group, said it was “not going to speculate” on whether Mexico would buy more American pork as a result of a deal with Trump.
“We are very pleased that the tariffs were not implemented on our largest volume market,” the group said.
In cattle, futures were technically oversold and due for a rebound, analysts said.
June live cattle settled up 2.775 cents at 109.7 cents/lb., and most actively traded August closed up the daily three-cent limit at 106.3 cents.
On Tuesday, CME will expand the daily price limit to 4.5 cents.
August feeder cattle rose 2.575 cents, to 139.825 cents/lb., and September feeders advanced 2.375 cents, to 139.725 cents.
— Tom Polansek reports on agriculture and ag commodities for Reuters from Chicago.