Chicago | Reuters — Chicago Mercantile Exchange lean hog futures soared by the daily limit and approached a one-month high on Wednesday on renewed hopes that China will increase pork imports to compensate for pigs killed in a widespread outbreak of a fatal swine disease.
China’s agriculture ministry said a new outbreak of African swine fever had been confirmed in Sichuan province in the southwest of the country.
The world’s biggest pork consumer has reported more than 140 outbreaks of the disease, for which there is no vaccine or cure, since the first case last August.
China’s imports of U.S. pork have so far fallen short of U.S. farmers’ expectations. However, a recent increase in Chinese pork prices is raising expectations that China may now start a major buying program, said Don Roose, president of Iowa-based broker U.S. Commodities.
“Demand pressures are starting to hit China,” Roose said. “The logical conclusion that the trade wants to believe is that this is the start of Chinese interest in the U.S.”
CME August lean hog futures closed up 2.95 cents at 82 cents/lb., after climbing by the daily, exchange-imposed three-cent limit (all figures US$). October hogs jumped 2.525 cents to finish at 77.825 cents and traded at its highest price since June 20.
Major pork imports by China would help reduce U.S. meat inventories that swelled as farmers increased herd sizes and meat packers slaughtered more animals.
Packers on Wednesday slaughtered 463,000 hogs, up from 460,000 a year ago, and 122,000 cattle, up from 118,000 a year earlier, according to U.S. Department of Agriculture data.
“We’d been supply bearish, but have turned more demand bullish with China markets trying to move up,” Roose said about pork. “The buying could be so significant.”
African swine fever has also spread in other Asian countries, including Vietnam and Laos, and parts of Europe.
Bulgaria stepped up measures to contain the disease, while the Philippines suspended meat imports from Germany after it was found to contain pork bones from Poland, which has an outbreak of African swine fever.
In cattle markets, declining beef prices weighed on livestock prices, traders said.
CME August live cattle futures closed down 0.1 cent at 108.125 cents/lb. CME October cattle slid 0.5 cent to 108.75 cents/lb.
CME August feeder cattle futures stumbled 0.475 cent to 140.575 cents/lb. September feeders declined 1.1 cents to 140.775 cents/lb.
— Tom Polansek reports on agriculture and ag commodities for Reuters from Chicago.