Chicago | Reuters — Chicago Mercantile Exchange lean hog futures soared by the company’s daily price limit to new contract highs on Wednesday on increasing worries about the spread of a deadly hog disease in China.
Traders expect that China, the world’s biggest hog producer and pork consumer, will need to import more U.S. pork as African swine fever leads to pig deaths in Asia.
There is no cure and no vaccine for the disease, which does not affect humans but is highly contagious and fatal to hogs.
Farmers and other industry insiders told Reuters that China’s African swine fever epidemic is far more extensive than official reports suggest, making the disease harder to contain, potentially causing pork shortages and increasing the likelihood that it will spread beyond China’s borders.
China will buy more pork from Chinese producers for its state reserves and recently ramped up pork purchases from the U.S. despite steep import tariffs.
“There’s obviously some ongoing China excitement,” a U.S. livestock trader said.
African swine fever spread to Vietnam last month and the United Nations’ Food and Agriculture Organization on Tuesday advised the country to declare its outbreak a national emergency.
April lean hogs settled up CME’s three-cent limit at 73.825 cents/lb., which was a contract high (all figures US$). June hogs ended up three cents at 90.25 cents per pound, also a contract high.
On Thursday, CME will temporarily expand the daily limit to 4.5 cents.
In the cattle market, prices increased as major floods in portions of the U.S. Plains fueled concerns about tighter beef supplies, traders said. Cattle carcasses have been found tangled in debris or rotting in trees following the quick rise of floodwaters.
Prior to the disaster, cold, snowy weather this winter had already slowed the weight gain in cattle.
“This is the latest insult that was added to the injury,” a trader said.
CME April live cattle futures ended up 0.45 cent at 129.575 cents/lb. while the June contract gained 0.65 cent to 123.375 cents.
April feeder cattle futures rose 0.525 cent to 148.325 cents/lb.
On Friday, the U.S. Department of Agriculture is set to release a monthly report that will show the number of cattle that were being fed for slaughter as of March 1.
— Tom Polansek reports on agriculture and ag commodities for Reuters from Chicago.