US hog futures drop under large supply pressure

US livestock futures dropped on Wednesday, with lean hogs stumbling under pressure from large supplies in a turnaround from a rally a session earlier.

14 November 2019, at 9:55am

Fresh uncertainty over US-China trade relations added pressure to the hog market, analysts said.

Traders and meat producers are hoping for further US pork sales to China, which is grappling with a fatal pig disease that has killed up to half its herd since August 2018. China is the world's largest hog producer and pork consumer.

However, sales are being hampered by steep tariffs that Beijing imposed on imports of US pork last year as part of the countries' bruising trade war. The Wall Street Journal reported that trade negotiations have hit a snag over farm purchases.

The hog market also faces continued pressure from a record-large US herd and increasing weights, traders said. The estimated average weight for the week ended 9 November was 287.9 pounds, up from 286.7 pounds a week earlier and 284 pounds a year earlier, according to the US Department of Agriculture.

"It's putting so much extra supply on the market," a trader said.

Chicago Mercantile Exchange (CME) December lean hogs fell 1.6 cents to 63.125 cents per pound. That was near a two-month low reached on Monday (11 November). February hogs slid 1 cent to 74.550 cents per pound.

The market pulled back after rising on Tuesday on technical buying and short covering.