Chicago | Reuters — U.S. hog futures jumped on Thursday on increased optimism about the potential for progress in trade talks between Washington and Beijing.
The top U.S. and Chinese trade negotiators resumed high-level negotiations to hash out a deal that could end their trade war, just over a week before a U.S.-imposed deadline to reach agreement expires and triggers a new round of tariffs.
The two sides are looking at a 10-item list to alleviate a U.S. trade deficit with China, including additional Chinese purchases of agricultural produce, according to sources. Beijing last year imposed tariffs on imports of U.S. farm products, including pork and soybeans, hurting U.S. exports.
“The market seemed to be feeling a little bit better about the tone of these talks,” said Dennis Smith, a commodity broker for Archer Financial Services in Chicago.
Chicago Mercantile Exchange April lean hogs ended up 2.975 cents at 55.95 cents/lb., after setting a contract low of 52.25 on Wednesday (all figures US$).
An increase in pork exports to China would be welcome. U.S. farmers have ramped up hog production due to low prices for grains used for feed and as processing companies have built new plants to slaughter swine in recent years.
The U.S. Department of Agriculture expects the value of U.S. farm exports to drop by $1.9 billion to $141.5 billion in fiscal 2019, versus 2018, led by a steep decline in shipments to China.
However, the U.S. could quickly recover its lost agricultural markets in China if a deal is struck, U.S. Agriculture Secretary Sonny Perdue said.
In the cattle market, prices pulled back after rising to a one-year high on concerns about cold, snowy weather slowing weight gain in herds and disrupting the transportation of livestock to slaughterhouses.
“It was sort of a one-day correction,” Smith said.
Chicago Mercantile Exchange February live cattle slipped 0.7 cent, to 127.625 cents/lb. April live cattle dropped 0.6 cent at 128.6 cents/lb.
March feeder cattle futures lost 0.65 cent, to 143.225 cents/lb.
— Tom Polansek reports on agriculture and ag commodities for Reuters from Chicago.