CME update: lean hog futures end lower as US-China trade relations worsen

US lean hog futures fell on 1 June as traders feared deteriorating relations between China and the United States could dampen pork sales.
calendar icon 2 June 2020
clock icon 3 minute read

Reuters reports that China told state-owned firms to cease purchases of soybeans and pork from the US. The move came after Washington DC announced it would eliminate special treatment for Hong Kong following China’s efforts to exact more control over the territory.

Halting pork and soybean sales would hinder China’s ability to fulfil its pledges under the “Phase 1” US-China trade pact signed earlier this year.

“China has already been backing off from pork purchases over the past three weeks,” said Rich Nelson, chief strategist for Allendale Inc.

Weekly US pork sales to China averaged more than 23,000 tonnes from early March through April, but net sales through the first three weeks of May were a net negative 417 tonnes, according to USDA data.

CME June lean hogs ended down 2.250 cents at 54.600 cents per lb on Monday, while most-active July futures settled down 1.875 cents at 55.150 cents per lb.

Wholesale pork prices fell. The USDA reported the US pork cutout, an indicator of wholesale prices, down $4.87 at $83.33 per cwt at midday. The USDA's afternoon update stretched the decline to $7.16, at $81.04 per cwt.

The US daily slaughter pace has been improving since April, when coronavirus outbreaks among workers forced numerous pork and beef packing plants to close. But a backlog of market-ready hogs persists, a factor that hangs over the futures market. A full recovery "could be a ways off," Nelson said.

Read more about this story here.

© 2000 - 2024 - Global Ag Media. All Rights Reserved | No part of this site may be reproduced without permission.