US hog futures drop to contract lows due to oversupply and coronavirus fears
On Thursday 30 January, US hog futures sank by their daily trading limit to contract lows due to increases in supplies and fears of the spreading coronavirus outbreak in China.
31 January 2020
2 minute read
By: According to reporting from Reuters, US hog supplies have increased after farmers expanded their herds to supply new processing plants. However, commodity traders are now worried that the coronavirus will stifle economic growth and demand in China, the world’s biggest pork consumer.
Traders were previously waiting for and increase in Chinese buying due to the 15 January trade deal between China and the US. In that deal, Beijing agreed to increase purchases of US farm goods.
“That’s the perception: that it’s going to slow down the Chinese economy,” said Dennis Smith, commodity broker for Archer Financial Services in Chicago.
China needs to import more meat due to the ongoing ASF epidemic which has devastated swine herds and pushed Chinese pork prices to record highs.
Weekly US pork export sales to China were relatively small at 1,506 tonnes from 17 to 23 January according to US Department of Agriculture data. But weekly shipments to China reached 18,617 tonnes, the most since July 2014, the data showed.
“Exports are ripping just like we thought they would,” Smith said.
