CME lean hog futures dive as U.S.-China trade war heats up
By Julie Ingwersen
CHICAGO, Aug 23 (Reuters) - Chicago Mercantile Exchange lean
hog futures tumbled on Friday, with the benchmark October
contract falling its daily 3-cent limit after China
announced a fresh set of tariffs on U.S. agricultural products,
China will levy extra 10% tariffs on U.S. beef and pork from
Sept. 1, its commerce ministry said, the latest retaliatory
measure aimed at the U.S. farm sector whose voters helped elect
President Donald Trump in 2016.
The moves dimmed hopes for a jump in U.S. pork exports at a
time of burdensome supplies.
"Hog supplies have started to ratchet higher. Cash hog
prices are lower, there is no positive news on the tariff front,
(and) export sales were weak. So everywhere you look, things
were not positive," said Altin Kalo, agricultural economist for
New Hampshire-based Steiner Consulting.
CME October lean hogs settled down the daily maximum
of 3 cents at 59.300 cents per pound, near the contract low of
The CME Group said daily trading limits for lean hog futures
would widen to 4.5 cents per pound for Monday's trading session.
Cash hog prices in the closely watched Iowa and southern
Minnesota market fell $1.59 on Friday, and the pork cutout fell
$0.29, according to the U.S. Department of Agriculture (USDA).
A year-long epidemic of deadly African swine fever has
slashed China's massive pig herd, the world's largest, by
one-third, according to official data, pushing prices of the
country's favorite meat to a new record.
China's pork imports more than doubled in July from the same
month a year earlier, customs data showed. But China's tariffs
on pork from the United States are restricting supplies from one
of its top suppliers.
The intensifying trade war also pressured CME cattle
futures, which closed lower on Friday for the first time all
week as recession worries swirled on Wall Street. Poor economic
conditions tend to discourage consumers from buying pricey cuts
"It's never good for the beef market when the macro picture
deteriorates. If the likelihood of a recession increases, it's
terrible for beef. It affects the food service business," Kalo
CME October live cattle futures settled down 1.700
cents at 99.400 cents per pound, and October feeder cattle
fell 2.950 cents at 132.525 cents per pound.
Until Friday, live cattle futures had been firming this week
as strong wholesale beef prices lifted packer margins and drove
up demand for live cattle.
However, wholesale beef prices retreated Thursday from
two-year highs and fell again on Friday, a bearish signal.
The USDA late Thursday quoted choice boxed beef cutout
<BEEF-US-CH> at $239.28 per cwt, down $2.46 from Wednesday's
two-year peak, and on Friday's morning report, prices were down
another $1.40, to $237.88 per cwt.
(Reporting by Julie Ingwersen
Editing by Tom Brown)
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