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CME update: US hog futures trade mixed

US hog futures were mixed on 19 October, with the nearby contract rising on strong export demand while later contracts eased on signs that China was rebuilding its decimated pig herd.

20 October 2020, at 8:45am

Reuters reports that strength in the cash market supported the front-month December contract, which rose 2.3 percent and hit its highest since 13 September 2019.

However, deferred contracts closed in negative territory on traders’ expectations that Chinese demand will start trending downward in the coming months.

"The Board is pretty pessimistic about prospects for next year," said Alan Brugler of Brugler Marketing & Management. "If they are ramping back up maybe they won't need as much going forward."

China's third-quarter pork production rose 18 percent from a year earlier to 8.4 million tonnes, according to Reuters calculations based on official data, pointing to the first signs of recovery in the world's top producer.

It was the first quarter since July-September of 2018 to show a year-on-year increase in pork output, after an epidemic of African swine fever swept through the country's hog herd, causing production to plunge.

CME December lean hogs finished 1.625 cents higher at 71.425 cents per pound. Losses in the deferred months ranged from 50 cents to $1.85.

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