Chicago | Reuters — Chicago Mercantile Exchange lean hog futures fell over two per cent on Tuesday, giving back gains notched in the previous session on broad selling across commodities amid fears of trade wars with importers of U.S. products including China and Mexico.
A decline in U.S. cash hog prices late on Monday also weighed on the futures market when trade resumed on Tuesday.
Traders were bracing for retaliation from China after U.S. President Donald Trump threatened more tariffs on $200 billion of Chinese goods (all figures US$). China has already slowed its imports of U.S. pork and other goods including soybeans while Mexico, the top buyer of U.S. pork, earlier this month said it imposed tariffs on some pork cuts.
“The whole trade issue is a disaster,” Archer Financial Services analyst Dennis Smith said.
U.S. pork packers expanded operations in recent years, in part to cater to new international demand from China and elsewhere. Now they were facing potentially reduced exports that could leave larger domestic stockpiles of hogs and pork.
CME July hogs settled down 1.85 cents at 81.875 cents/lb. and most-active August hogs off 1.7 cents, to 77.725 cents.
The U.S. Department of Agriculture, after the futures market closed, said cash hogs in the biggest market of Iowa and southern Minnesota were 67 cents higher at $83.50/cwt. Prices on Monday had dropped by 70 cents to $82.83, prompting futures selling.
Live and feeder cattle futures rebounded from earlier declines to turn higher, lifted by technical buying and positioning ahead of USDA’s monthly Cattle on Feed report due on Friday.
Analysts polled by Reuters expected the USDA to show 11.47 million cattle were on feed as of June 1, or 103.4 per cent of a year ago. Cattle placements in May were forecast at 95.6 per cent of a year ago, or 2.026 million cattle.
A drop in placements could suggest slightly fewer cattle available to beef packers later this year.
Most-active CME August live cattle were up 1.25 cents, to 106.425 cents/lb., and August feeder cattle up 0.65 cent, to 149.625 cents.
— Michael Hirtzer reports on commodity markets for Reuters from Chicago.