Chicago | Reuters — U.S. lean hog futures on the Chicago Mercantile Exchange (CME) fell the daily three-cent-per-pound limit on Monday as fears of a prolonged trade war between the U.S. and China triggered long liquidation, analysts said.

China said it would impose higher tariffs on a range of U.S. goods, following Washington’s decision last week to hike its own levies on $200 billion in Chinese imports (all figures US$).

U.S. President Donald Trump said on Monday he would meet with Chinese President Xi Jinping next month, as the trade war between the world’s two largest economies intensified, sending shivers through global commodity and equity markets.

“This was a horrible way to start out of the week. And you get the stock market down; that’s going to add to the downside selling pressure,” said Jeff French, livestock analyst with Top Third Ag Marketing.

CME June lean hog futures closed down the daily three-cent limit at 86.675 cents/lb. July lean hogs also ended limit down at 87.75 cents.

The CME Group said daily limits on lean hog futures would expand to 4.5 cents/lb. for Tuesday’s trade.

Commodity funds hold a sizable net long position in CME lean hog futures, leaving the market vulnerable to bouts of long liquidation.

Funds bought up hog futures this spring on ideas that the spread of African swine fever in China’s hog herd, the world’s largest, would boost export demand for U.S. pork.

“Hogs have long-term positive potential, but it’s a market that is a little bit loaded up on the long side. And the news last week on both parties walking away (from U.S.-China trade talks), or cooling off, is concerning to the length in the market,” said Matt Connelly, analyst at the Hightower Report.

Live cattle and feeder cattle futures followed the weak tend in lean hogs.

CME June live cattle futures settled down 2.7 cents at 109.75 cents/lb. August live cattle fell 1.975 cents to 106.925 cents/lb.

August feeder cattle fell 3.725 cents to 143.1 cents/lb. and September feeder cattle ended down 3.475 cents at 144.3 cents.

— Julie Ingwersen is a Reuters commodities correspondent in Chicago.