Chicago | Reuters — Chicago Mercantile Exchange (CME) lean hog futures ended down sharply for a second straight day on Friday after a volatile session in which traders weighed thinner near-term hog supplies against risks to pork exports with Mexico.
Early-session strength stemmed from a quarterly U.S. Department of Agriculture hog supply report, released after the close on Thursday, which showed slightly tighter-than-expected near-term supplies.
But the market plunged after President Donald Trump threatened to close the U.S.-Mexico border next week as the government deals with a surge of asylum seekers from countries in Central America who travel through Mexico.
“The death knell for the hog market could have been the talk by the president shutting down the Mexican border next week and that it was going to be for a long time. That makes the market question what it means for cross-border trade,” said Mike Zuzolo, president of Global Commodity Analytics.
Mexico, the top importer of U.S. pork in terms of volume, bought $1.3 billion of the meat last year, according to U.S. government data (all figures US$).
CME April lean hogs ended down 1.5 cents at 77.375 cents/lb. while June hogs, the most active contract, fell 3.25 cents, to 88.55 cents. Deferred contracts were down 1.125-4.025 cents.
Lean hogs were trading with expanded daily limits on Friday after dropping by the normal three-cent daily limit on Thursday due to recent disappointing export sales data.
The hog market hit the highest point in nine months earlier this week on hopes for a surge in pork sales to China, which is dealing with a severe outbreak of African swine fever in its domestic hog herd.
But China has been largely absent from the U.S. pork market since a large purchase in early March. The United States and China are in talks to hammer out a trade deal that could include large future purchases of U.S. goods, including pork.
Live and feeder cattle futures ended mostly lower on Friday on spillover pressure from the sharply lower hog market.
Weaker cash cattle sales at feedlot markets earlier in the week hung over live cattle futures, along with a seasonal trend for rising cattle supplies.
April live cattle futures ended 0.825 cent lower at 125.7 cents/lb. while the actively traded June contract fell 0.625 cent, to 119 cents.
April feeder cattle futures were 0.7 cent lower at 145.25 cents/lb., while May feeders were down 0.9 cent at 148.775.
— Karl Plume reports on agriculture and ag commodities for Reuters from Chicago.