Chicago | Reuters — U.S. hog futures sank to contract lows on Friday, their third straight day of declines in the fifth in the last six sessions, on worries about the coronavirus wreaking havoc on demand from China, traders said.
On a continuous basis, the front-month hog futures contract hit its lowest since March 6, 2019. That capped a month that saw the front-month contract shed 20.4 per cent of its value, the biggest monthly decline since July 2018.
“Most of the focus I think remains on an unknown impact of China’s expanding coronavirus issues,” INTL FCStone said in a note to clients.
“We’re all aware the hog markets have long been counting on massive export business to China as our outlet for record large pork production, but now they’re seeing a sharp decline in consumerism, travel restrictions, and now even three port closings until mid-February, which heightens exporters’ anxieties further.”
Originating in the Chinese city of Wuhan, the flu-like virus first identified earlier this month has resulted in 213 deaths in China. Wuhan and the surrounding region are in virtual quarantine.
Trading with expanded daily limits, February lean hog futures fell 4.175 cents to 57.125 cents/lb. at the Chicago Mercantile Exchange (all figures US$). The most-active April contract dropped 4.225 cents, to 61.6 cents.
Cattle futures ended mixed, with the most-active live cattle contract easing for the fifth day a row while feeder cattle contracts rebounded on some bargain buying after hitting its lowest in more than four months on Thursday.
April live cattle futures shed 0.525 cent to 119.675 cents/lb. The contract dropped below its 200-day moving average but found support at the low end of its 20-day Bollinger range, ending above the more-than 3-1/2-month low it hit on Thursday.
March feeder cattle futures gained 0.425 cent to close at 136.075 cents/lb.
All cattle and calves in the U.S. as of Jan. 1, 2020, totaled 94.4 million head, slightly below the 94.8 million head on Jan. 1, 2019, the U.S. Agriculture Department said in its biannual cattle inventory report.
— Mark Weinraub is a Reuters commodities correspondent in Chicago.