U.S. livestock: Hog futures set nine-month low on big supplies, China trade tensions

Chicago | Reuters – Chicago Mercantile Exchange (CME) hog futures extended their decline on Friday, with the most active contract touching its lowest price in nine months under pressure from large supplies and the worsening U.S.-China trade war.

Cattle futures also weakened.

China on Friday vowed to fight back against U.S. President Donald Trump’s abrupt decision to slap 10 percent tariffs on the remaining $300 billion in Chinese imports, a move that ended a month-long trade truce.

Trump separately announced a deal to sell more American beef to Europe, a modest win as the administration is mired in the trade war with China.

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But rising trade tensions between Washington and Beijing have reduced hopes among U.S. farmers and traders for a quick agreement to end the trade war that slowed exports of American farm products, including pork, to China.

American farmers and market analysts still expect the United States to benefit from Chinese demand this year. They expect China will need to increase meat imports to offset the deaths of millions of hogs in an outbreak of the pig disease African swine fever.

China’s demand for U.S. pork so far has been disappointing, though, analysts said. That leaves American supplies plentiful after farmers increased their hog herds.

Concerns about the large supplies, coupled with technical selling, pushed down prices, traders said.

“We do have an oversupply of hogs,” said Arlan Suderman, chief commodities economist for broker INTL FCStone. “We expanded faster than the demand from China came.”

CME August lean hog futures settled 0.525 cent lower at 76.275 cents per pound and touched their lowest price since July 9. Most-active October hogs tumbled 1.750 cents to 65.725 cents per pound and reached their lowest price since Nov. 7.

The December and February hog futures contracts dropped by CME’s daily, 3-cent limit. CME will expand the limit to 4.5 cents on Monday.

Demand worries also hung over cattle futures.

“Cattle are also starting to feel the effect of light exports as well as a seasonal trend to a slower consumer demand pace, as the summer grilling season draws to a close,” said Karl Setzer, commodity market risk analyst for AgriVisor.

CME August live cattle futures slipped 0.225 cent to 107.650 cents per pound. October live cattle declined 0.900 cents to 107.825 cents per pound.

CME August feeder cattle stumbled 1.600 cents to 139.625 cents per pound. September feeders sank 3.300 cents to 138.225 cents per pound and hit the lowest price in about a month.

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