Chicago | Reuters — Chicago Mercantile Exchange (CME) lean hog futures drifted lower on Wednesday and touched a one-week low as the market was pressured by concerns that the U.S.-China trade war is far from resolution.
Traders did not expect any significant Chinese buying of U.S. pork in weekly export sales data due to be released by the U.S. Department of Agriculture (USDA) early on Thursday.
Trade negotiations between the U.S. and China, the world’s largest hog and pork market, stalled last month and no further talks have been scheduled.
China is expected to increase pork imports this year as its domestic hog herd has been ravaged by the deadly African swine fever. Steep duties on U.S. imports imposed by Beijing last year as part of a tit-for-tat tariff battle remain in place.
CME June lean hog futures closed 0.45 cent lower at 89.65 cents/lb. while actively traded July hogs ended down 0.325 cent at 91.05 cents.
“Right now we have some disappointment over no U.S.-China trade deal overhanging the market along with no Chinese buying likely for a few more weeks,” said Rich Nelson, chief strategist with Allendale Inc.
Weak wholesale pork and cash hog prices also offered little support to futures, he said, adding the market is looking ahead to a possible seasonal tightening of hog supplies later in June.
After two days of higher prices, the wholesale pork carcass cutout value fell $2.24, to $84.83/cwt, on Wednesday, down $1.98 from a week ago.
Cash hog prices in the closely watched Iowa and southern Minnesota market fell $1.64 on Wednesday.
CME live cattle futures also declined as weakening cash cattle prices weighed on the market. Feeder cattle futures dropped along with live cattle, weighed down by rising corn feed costs.
June live cattle fell 0.2 cent to 110.65 cents/lb., while actively traded August was down 0.325 cent at 107.95 cents.
August feeder cattle finished down 0.4 cent at 142.6 cents/lb. and September feeders fell 0.3, to 143.875 cents.
After the close, USDA reported a sharp drop in beef stocks in cold storage as of April 30, while pork belly stocks rose.
Traders are looking ahead to USDA’s monthly cattle on feed report on Friday. Analysts polled by Reuters expect April placements to rise 13 per cent from a year ago and total May 1 on-feed supplies up 2.9 per cent.
— Reporting for Reuters by Karl Plume in Chicago.