Chicago | Reuters –– U.S. hog futures rallied to a five-month high on Friday, closing at their daily trading limit on improving export prospects due to a sharp reduction in China’s domestic supplies, traders said.
China’s pig herd slid 16.6 per cent in February from the previous year, as African swine fever swept the country, data from the ministry of agriculture and rural affairs showed on Friday.
The hog market had already risen sharply this week on news that China had resumed imports of U.S. pork even as the trade war between the two countries remains unsettled.
“Futures already had big premiums priced in prior to this move, but after this past week’s developments the industry is clearly pricing in even more certainty that China’s ASF problems are real and impactful,” brokerage INTL FCStone said in a note to clients.
Chicago Mercantile Exchange April lean hogs gained three cents to 68.8 cents/lb. (all figures US$). June hogs rose three cents to 86.525 cents.
Hog futures rose 13.6 per cent this week, their third straight weekly gain.
Cattle contracts also rose.
CME April live cattle was 1.7 cents higher at 129.1 cents/lb. The June contract was up 1.575 cents at 121.925 cents.
April feeder cattle gained 2.275 cents to 146.925 cents/lb.
— Mark Weinraub is a Reuters commodities correspondent in Chicago.