Chicago | Reuters — U.S. lean hog futures rose modestly on Thursday on technical buying and hopes China will step up purchases of U.S. agricultural goods including pork as the U.S.-China Phase One trade deal takes effect, brokers said.
Benchmark April lean hog futures on the Chicago Mercantile Exchange settled up 0.3 cent at 64.075 cents/lb., halting a three-session slide (all figures US$).
Traders noted the Phase One trade agreement was to go into effect 30 days after its Jan. 15 signing by U.S. and Chinese officials. Under the deal, China agreed to buy at least $200 billion in additional U.S. goods and services over two years, including $32 billion in additional imports of U.S. farm products.
“The things they (China) have kind of been committed to are soybeans and pork, so today you are getting a little bit of support in each of those markets,” said Don Roose, president of Iowa-based U.S. Commodities.
Some traders expect China to buy more U.S. pork as the Asian nation struggles with meat shortages caused by an epidemic of African swine fever that slashed the size of its huge hog herd last year. More recently, measures to battle the coronavirus epidemic in China have restricted the transport of pigs and delayed the restart of slaughtering plants.
The U.S. Department of Agriculture reported export sales of U.S. pork in the week ended Feb. 6 at 28,600 tonnes, including 3,700 tonnes for China. Pork shipments to China totaled 13,000 tonnes, down from 16,200 tonnes shipped a week earlier.
Weak cash hog and pork markets hung over the futures market, capping rallies. The U.S. pork cutout fell by 86 cents on Thursday afternoon, and cash hog prices in the closely watched Iowa and southern Minnesota market fell by 37 cents, according to USDA.
In cattle, CME live cattle futures closed higher for a second straight session on short-covering and follow-through technical buying a day after the April live cattle futures contract rallied from a 4-1/2 month low.
CME April live cattle settled up 0.675 cent on Thursday at 118.525 cents/lb. March feeder cattle futures rose 1.275 cents to 136.325 cents/lb.
The choice boxed beef cutout value rose 14 cents, to $206.45/cwt, on Thursday afternoon, while select cuts fell $1.51, to $203.79/cwt.
— Julie Ingwersen is a Reuters commodities correspondent in Chicago.