Chicago | Reuters — U.S. lean hog futures climbed by an expanded daily limit on Friday as China said it would exempt U.S. pork from additional tariffs imposed during its trade war with the United States.
The exemptions raised hopes for Chinese buying and were seen as the latest sign of easing Sino-U.S. tensions before a new round of talks aimed at curbing the bruising trade dispute.
China has imposed three rounds of retaliatory tariffs on U.S. pork, including 25 per cent increases in April and July 2018 and a 10 per cent bump this month, raising the total duty to 72 per cent from 12 per cent before the trade war.
It was not immediately clear if Beijing would suspend some or all of the tariffs, which have sliced U.S. export sales to China, the world’s top pork consumer.
China has the potential to further increase imports because an outbreak of deadly African swine fever has cut its pig herd by a third since mid-2018, traders said. The trade war and Beijing’s tariffs have been a hurdle for U.S. suppliers, though.
“The real winner in a trade resolution with China may be the pork industry,” said Karl Setzer, commodity market risk analyst for Agrivisor.
Chicago Mercantile Exchange (CME) October lean hogs jumped 3.3 cents to 66.475 cents/lb. and reached a one-week high. December lean hogs soared the maximum 4.5 cents to a six-week high of 68.7 cents/lb. February hogs also climbed the daily trading limit.
The exchange temporarily increased the limit to 4.5 cents after the market shot up by the standard three-cent limit on Thursday. The expanded limit will remain in place on Monday.
Beijing said on Thursday that Chinese firms had started to inquire about prices for U.S. farm goods and that possible purchases included pork.
“It was the China discussion that really provided the catalyst here,” said Mike Sands, an independent U.S. livestock market analyst.
Cattle futures traded mixed but seem to have bottomed after recent declines, brokers said.
Futures and cash prices fell after a fire last month at a Tyson Foods slaughterhouse at Holcomb, Kansas removed a key buyer from the market.
Cash cattle prices firmed as this week progressed, helping to support futures, traders said. Cash cattle traded in the southern Plains for $99/cwt, compared to $100 a week ago, Sands said.
CME October live cattle futures ended down 0.65 cent at 98.075 cents/lb. October feeder cattle rose 0.075 cent, to 134.575 cents/lb.
— Tom Polansek reports on agriculture and ag commodities for Reuters from Chicago.