Chicago | Reuters — U.S. lean hog futures jumped more than two per cent on Wednesday on news that the Trump administration is attempting to restart trade negotiations with China, a major importer which has steep duties on shipments of U.S. pork.
Senior U.S. officials led by Treasury Secretary Steven Mnuchin recently sent an invitation to their Chinese counterparts as Washington is preparing to activate punitive tariffs on $200 billion worth of Chinese goods (all figures US$).
China currently levies steep import tariffs on U.S. pork. Any reduction in those duties could unleash buying by the world’s top pork consuming country.
The news came as China has been battling deadly African swine fever.
“We rallied after reports about the restart of the trade negotiations with China. Given the ongoing swine fever concern, there are ideas that China will have to import from somewhere to make up any shortfall,” said Matthew Wiegand, a broker with FuturesOne.
The reports on trade came amid improving cash hog prices, strong pork packer margins and a steep drop in the price of feed corn, he said.
Chicago Mercantile Exchange October lean hogs ended up 1.325 cents/lb. at 55.8 cents, recovering nearly all of the prior session’s losses. December gained 1.525 cents, to 55.625 cents.
The U.S. hog slaughter dropped on Wednesday as plants in North Carolina prepared to shut down ahead of Hurricane Florence, which is expected to hit the Carolina coast later this week.
Live cattle futures also climbed on technical buying and hopes for higher cash market prices amid strong beef packer margins.
Cattle traders are still waiting for cash deals to develop this week. Bids and offers at U.S. Plains feedlot cattle markets remained far apart on Wednesday, and no cattle were traded on the weekly online fed cattle exchange.
CME October live cattle jumped 2.175 cents per pound to 111.475 cents, with gains accelerating as the contract broke above its 200-day moving average around 110.1 cents. December cattle ended up 1.6 cent at 115.525 cents.
October feeder cattle ended 2.575 cents higher at 155.025 cents/lb. and November futures jumped 2.4 cents, to 154.825 cents.
— Karl Plume reports on agriculture and ag commodities for Reuters from Chicago.