Chicago | Reuters — Chicago Mercantile Exchange (CME) livestock futures swung wildly on Monday, with the most-active October lean hog futures going nearly limit-up and -down in the same trading session, amid growing tensions in the U.S.-China trade war.
China’s commerce ministry said that Chinese companies have stopped buying U.S. agricultural products, and that China will not rule out imposing import tariffs on U.S. farm products that were bought after Saturday (Aug. 3).
The moves by China represent the latest amplification of its trade dispute with the United States, and were made after China let the yuan weaken beyond the key seven-per-dollar level on Monday for the first time in more than a decade.
“Everyone’s in a panic mode right now in the hogs,” said Dan Norcini, an independent livestock trader based in Idaho. “It has nothing to do with fundamentals, or what’s happening in China right now with their herd.”
CME August lean hog futures settled 1.575 cents higher at 77.85 cents/lb. — but dipped mid-session to its lowest prices and touched their lowest price since June 25 (all figures US$).
Most-active October hogs ended the day up 1.7 cents to 67.425 cents/lb. Earlier in the day, the contract fell to its lowest price since Aug. 25, 2018.
China on Friday vowed to fight back against U.S. President Donald Trump’s abrupt decision to slap 10 per cent tariffs on the remaining $300 billion in Chinese imports, a move that ended a month-long trade truce.
The market has been expecting China to increase meat imports to offset the deaths of millions of hogs in an outbreak of the pig disease African swine fever.
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 U.S. farm products, including pork, to China.
Meanwhile, U.S. supplies are hefty after farmers increased their hog herds.
“With the fickleness of the Trump tweets and the Chinese response, you had a lot of people today throwing in the towel because of money management — and then others jumping in,” Norcini said.
“I’ve been doing this for 28 years and I’ve seen some wicked volatilities, but I’ve never seen a trading day in livestock like this,” he said.
Demand worries also hung over cattle futures, amid lighter-than-expected export demand and the U.S. summer grilling season is more than halfway over, traders said.
Cattle futures also felt a spillover effect from the hogs market, albeit with less volatility, said Don Roose, president of U.S. Commodities in West Des Moines, Iowa.
CME August live cattle futures ended the day up 0.15 cent to 107.8 cents/lb. October live cattle declined 0.425 cents to 107.4 cents/lb.
CME August feeder cattle inched up 0.9 cents, to 140.525 cents/lb. September feeders rose 1.175 cents to 139.4 cents/lb.
— P.J. Huffstutter reports on agriculture and agribusiness for Reuters from Chicago.