U.S. livestock: Lean hogs bounce after sell-off, cattle also rise

Chicago | Reuters — Chicago Mercantile Exchange (CME) lean hog futures rallied as much as four per cent on Wednesday in a technical buying and short-covering bounce following a string of losses triggered by worries over exports to China.

The world’s largest hog and pork market has threatened to halt all U.S. agricultural product purchases after U.S. President Donald Trump vowed to slap more tariffs on more Chinese goods next month if there is no progress toward a trade deal between the two countries.

Fears about the spread of African swine fever in Europe added support as traders speculated that U.S. pork exports could benefit.

Livestock markets also caught an updraft from a recovery in outside markets including equities and energy markets, which bounced from steep early-session losses on Wednesday afternoon.

“We beat down the hogs too hard, down seven of the last 10 sessions and they shed 19 per cent of their value,” said Karl Setzer, commodity market risk analyst for AgriVisor.

“There’s also still concerns in the market that African swine fever is going to spread in Europe and eventually we are going to see the demand come through for U.S. pork,” he said.

CME October hogs, which touched an 11-1/2 month low on Monday, ended the day up 2.25 cents at 66.85 cents/lb. (all figures US$).

August lean hog futures settled 0.6 cent higher at 77.725 cents per pound, supported by their large discount to the CME lean hog index. August futures and the index, which last stood at 84.19 cents, must converge by the futures contract’s expiration on Aug. 16.

Live cattle futures also advanced on Wednesday as the stabilizing stock market was seen underpinning consumer sentiment, which tends to favor demand for beef over less expensive meats like pork and poultry.

CME August live cattle futures ended the day up 0.475 cent at 107.6 cents/lb. The contract was underpinned by its discount to prices for feedlot cattle, which traded at mostly $114/cwt last week in the central Plains.

Actively traded October live cattle futures gained 0.225 cent to 106.45 cents/lb.

Feeder cattle futures were mixed, with August ending down 0.425 cent at 139.55 cents/lb. and September feeders down 0.075 cent at 139.375 cents/lb. Deferred month contracts were up 0.15 to 0.25.

— Karl Plume reports on agriculture and ag commodities for Reuters from Chicago.