Chicago | Reuters — U.S. lean hog futures climbed to their highest price since July on Monday on expectations for Chinese buying, while technical selling pushed down cattle futures.
Meat traders anticipate China will increase pork imports to offset an expected shortage caused by an outbreak of African swine fever, a fatal pig virus that has reduced the Chinese herd by a third in the past year.
China’s hog herd, the world’s largest, shrank by 38.7 per cent in August versus a year ago, according to data from China’s ministry of agriculture and rural affairs.
Bigger Chinese imports would help reduce U.S. pork supplies that have swelled as China’s herd has contracted.
“It’s just the timing issue,” said Arlan Suderman, chief commodities economist for U.S. broker INTL FCStone. “When are they really going to pick up on the shipments?”
Chicago Mercantile Exchange (CME) October lean hogs fell 2.85 cents to 63.625 cents/lb., bucking a higher trend in the market. December lean hogs climbed 1.975 cents to 70.675 cents/lb. and reached their highest price since July 31.
U.S. pork producers have already benefited from China’s outbreak. Exports to China and Hong Kong set a record in July, more than tripling from a year earlier, according to the most recent data from the industry group U.S. Meat Export Federation.
China has repeatedly imposed retaliatory tariffs on imports of U.S. farm goods since last year as a result of the countries’ trade war. Beijing said on Friday it would exempt American pork from additional tariffs, but it was not clear which duties would be suspended.
Deputy trade negotiators for the U.S. and China are set to meet in Washington starting on Thursday.
In the cattle markets, prices pulled back after jumping last week.
“The markets moved up and got a little overbought,” said Larry Hicks, president of CattleHedging.com.
CME October live cattle futures ended down 0.075 cent at 98 cents/lb. October feeder cattle slipped 0.375 cent to 134.2 cents/lb.
Stabilizing cash prices could underpin further gains in futures, traders said.
Cash prices for cattle during the next two to three weeks could average $105-$106/cwt in five major cattle-producing areas tracked by the U.S. Department of Agriculture, Hicks said. That would be up from about $100/cwt last week.
Futures and cash prices fell after an August fire at a Tyson Foods slaughterhouse at Holcomb, Kansas, removed a key buyer from the market.
— Reporting for Reuters by Tom Polansek in Chicago.