Chicago | Reuters — U.S. hog futures closed mixed on Tuesday as front-month contracts stumbled in a setback from recent gains, while deferred contracts rose on expectations for increased demand from China due to an outbreak of a fatal hog disease.
Gains in the market have been fueled by worries about an epidemic of African swine fever in China, home to the world’s largest hog herd. The country has reported about 120 cases of the disease since it was first detected there in early August 2018.
Deferred contract months continued to rise on expectations for increased demand. China may buy more pork to meet its growing supply deficit, but it is not willing to allow a prohibited growth drug used in roughly half the U.S. hog herd, two sources with knowledge of the negotiations said.
In nearby months, contracts pulled back. The most actively traded June hogs contract has retreated since reaching a contract high on April 5.
“We’ve ran up the market on the June here,” said Altin Kalo, agricultural economist for New Hampshire-based Steiner Consulting. “It’s taking a little bit of a breather.”
Most-active CME June lean hog futures ended down 1.175 cents at 97.125 cents/lb. (all figures US$). August hog futures rose 0.225 cent to 102 cents/lb.
CME live cattle and feeder cattle futures closed higher, supported by adverse U.S. weather that tightened supplies and by expectations for improving beef demand.
“With the storms that moved through at the end at last week, I don’t think we saw nearly as many cattle move,” said Matthew Wiegand, broker at FuturesOne. “The packers are short-bought.”
CME June live cattle futures rose 0.975 cent to close at 122.45 cents/lb. and front-month April settled up 0.85 cent at 127.15 cents.
May feeder cattle futures advanced 0.175 cent, to 151.2 cents, while August feeders gained 1.05 cents, to 160.2 cents.
— Tom Polansek reports on agriculture and ag commodities for Reuters from Chicago.