Chicago | Reuters –– U.S. lean hog futures jumped to a nearly two-week high on Wednesday on speculation that exports of U.S. pork to China will rise in the coming months, traders and analysts said.
Representatives from the U.S. and China were negotiating to end the trade war between the world’s biggest economies that has impeded shipments of pork, soybeans and other goods. China also was working to slow the spread of the highly contagious African swine fever virus.
Each factor could boost exports of U.S. pork to China, where the ASF virus has forced the top consumer of the meat to cull hog herds.
China on Wednesday reported a new outbreak on a farm with 73,000 pigs in Heilongjiang province while the agriculture ministry said slaughterhouses will have to test pig products for presence of the virus before selling them at market.
Chicago Mercantile Exchange February lean hog futures surged as much as four per cent to a high of 63.425 cents/lb. before the contract settled at 61.7 cents, up 0.725 (all figures US$).
“The news of ASF at the really big farm in China was the catalyst,” independent livestock futures trader Dan Norcini said of the rally in hog futures. He added that some commercial hog operations likely sold futures to lock in higher prices, which helped bring prices off their highs.
China still has a 25 per cent tariff on imports of U.S. pork. Buyers in China have increased purchases of U.S. pork in recent weeks for supplies to be shipped at some point in 2019. But more sales were needed to convince some traders that China would buy enough pork to help eliminate large U.S. stockpiles.
“This is another feather in the cap for the bulls, but we still don’t have any business to China,” Norcini said of pork exports.
Cattle futures were mostly lower on Wednesday, weakening on technical selling amid a lack of news to propel gains.
CME February live cattle settled down 0.35 cent at 123.525 cents/lb. and CME March feeder cattle shed 0.8 cent to end at 145.95 cents/lb.
— Michael Hirtzer reports on commodity markets for Reuters from Chicago.