Chicago | Reuters — Lean hog futures on the Chicago Mercantile Exchange (CME) closed higher on Tuesday, bouncing a day after falling to a one-month low as traders adjusted positions ahead of Wednesday’s planned signing of a U.S.-China trade agreement, brokers said.
“The choppy trade continues. There is clearly some nervousness associated with what is going on with the signing of this deal with China,” said Tim Hackbarth, analyst with Top Third Ag marketing in Chicago.
CME February hog futures settled up 1.775 cents at 67.675 cents/lb. (all figures US$).
U.S. and Chinese officials are expected on Wednesday to sign a Phase One trade deal that may enable the two sides to start resolving a trade war that has led to cuts in exports of U.S. farm products to China.
Reports say China has agreed to vastly increase U.S. agricultural imports, but the text of the proposed agreement has not been released, leaving markets uncertain.
“Pork-wise, what are they going to buy? We don’t know … I think the trade really wants to see some export business or at least some solid numbers to work with,” Hackbarth said.
China’s pork imports jumped 75 per cent in 2019 to 2.108 million tonnes, according to Chinese customs data, after African swine fever, a deadly animal disease, decimated the country’s huge hog herd, sending Chinese pork prices soaring.
China’s soybean and pork imports from the United States “significantly rebounded” in November and December, customs vice-minister Zou Zhiwu said at a briefing on Tuesday.
Meanwhile the U.S. pork cutout rose by a nickel to $74.29/cwt late Tuesday, after climbing $1.74 a day earlier.
On the cattle side, CME live cattle futures rose on firming wholesale beef prices despite a slaughter pace that has topped 120,000 head a day each day this month so far.
“The slaughter numbers have been robust, and cutout prices being firm – the packers are making money and they will keep the beef moving through the pipeline,” Hackbarth said.
The wholesale choice boxed beef cutout value rose $2.21, to $212.76/cwt, on Tuesday afternoon, the U.S. Department of Agriculture said. Select cuts were $210.30/cwt, up $2.07 on the day.
CME February live cattle rose 0.3 cent to settle at 126.85 cents/lb. April cattle ended up 0.35 at 127.875 cents.
Nonetheless, CME feeder cattle futures fell for a second straight session, with March futures down 0.125 cent at 145.725 cents/lb.
— Julie Ingwersen is a Reuters commodities correspondent in Chicago.