Chicago | Reuters — U.S. lean hog futures were mostly higher on Wednesday on firm cash hog prices and concerns about the spread of African swine fever in China, the world’s top hog and pork producer, traders said.
But the market closed below session highs and some contracts settled below prior-day levels as the impact on China’s hog industry appeared minimal so far and Chinese demand for U.S. pork was not likely to grow much due to steep tariffs on U.S. shipments.
Still, prices remain underpinned by worries that the disease would spread beyond the nine cases reported so far.
“The African swine fever in China has everybody abuzz,” said Don Roose, president of U.S. Commodities in West Des Moines, Iowa.
“We’re building in a premium for that and we’re building in a premium that we’re going to have better relations with Canada and Mexico,” he said, citing market optimism that a broader resolution to trade talks between the North American trading partners could come soon.
Chicago Mercantile Exchange October lean hogs rose 0.9 cent/lb. to 51.975 cents/lb. while December ended down 0.075 cent at 55.175 cents (all figures US$).
Cash hog prices have trended higher in recent days, prompting speculation that the market has reached a bottom.
The average cash hog price in the closely followed Iowa and southern Minnesota market rose 38 cents on Wednesday in a third straight day of gains, according to the U.S. Department of Agriculture.
CME live cattle futures retreated despite strong packer margins and robust beef demand in a profit-taking and technical setback following Tuesday’s strong gains, while feeder cattle ended mixed.
Average beef packer margins swelled to $257.20 per head on Wednesday, up from $245.55 a week ago and $148.60 at the same time last year, according to livestock marketing advisory service HedgersEdge.com.
CME October live cattle fell 0.825 cent to 109.050 cents/lb. while December futures shed 0.65 cent to close at 113.75 cents.
September feeder cattle were unchanged at 151.725 cents/lb. while actively traded October ended down 0.35 cent at 151.475 cents/lb. Deferred-month futures were 0.075-0.925 cent higher.
— Karl Plume reports on agriculture and agribusiness for Reuters from Chicago.