U.S. livestock: Trade war jitters drag on CME hogs

(Regis Lefebure photo courtesy ARS/USDA)

Chicago | Reuters — Chicago Mercantile Exchange lean hog futures on Wednesday hit a three-month low, partly rattled by talk of a potential trade war if the U.S. tacks higher tariffs on imported steel and aluminum, traders said.

Wednesday’s U.S. stock market slumped as U.S. President Donald Trump appears poised to impose steep tariffs this week that could hurt allies of the U.S., including Mexico and Canada.

Roughly one quarter of pork produced in the U.S. is exported. Mexico and Canada are the top- and fourth-ranked markets for U.S. pork by volume, according to industry experts.

“When you’re talking about messing with trade in our four or five largest trade partners on pork, there isn’t anything positive that could come out of that,” said independent market analyst Mike Sands.

CME lean hogs were further pressured by lacklustre domestic meat demand in the midst of the Lenten season, said traders. A nor’easter is pounding parts of the East Coast which could hurt demand there.

Heavy snowfall in the northeastern region of the country likely shut down a hog packing plant in the area, a Midwest hog merchant said.

Despite demand headwinds, packers are competing for hogs while capitalizing on their impressive margins, said analysts and traders.

April hogs closed down 0.4 cents/lb. at 67.8 cents (all figures US$). May finished 1.65 cents lower at 72.6 cents.

Live cattle gain slightly

CME live cattle rose modestly on short-covering and investors that priced in initial prices for slaughter-ready, or cash, cattle, said traders.

Uneasiness about a U.S. trade war risk capped live cattle futures advances.

“Everybody right now is a little concerned about where we are right now with tariffs. Nobody really wants to step into this thing (market) one way or the other,” said JRS Consulting owner Jack Salzsieder.

April live cattle closed up 0.15 cent/lb. at 122.975 cents. June finished up 0.05 cent at 114.825 cents.

Packers so far paid $126/cwt for a few cash cattle in the U.S. Plains and at Wednesday’s Fed Cattle Exchange auction. Last week’s cattle prices were $125-$127.50.

Other feedlots want $128 to $130 per cwt for their livestock based on rising packer profits.

Processors are resisting bidding up for cattle that are more plentiful than last week.

Steady-to-lower feeder steer prices weighed on CME feeder cattle contracts. March feeders ended 0.525 cent/lb. lower at 143.775 cents.

— Reporting for Reuters by Theopolis Waters in Chicago.

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