Chicago | Reuters — U.S. lean hog futures on the Chicago Mercantile Exchange (CME) closed mixed on Monday as traders weighed positive news of easing trade tensions with Mexico and Canada against signs that trade ties with China are worsening.

The U.S. struck deals last week to lift tariffs on steel and aluminum imports from Mexico and Canada and eliminate retaliatory tariffs on U.S. products, including pork and beef. The deals remove a major obstacle to legislative approval of a revamped trade agreement between the three North American neighbors.

But trade ties with China, the world’s largest hog and pork market, have soured since the last round of talks on May 10, clouding prospects for large Chinese purchases of U.S. pork.

“We initially rallied because the trade agreement with Mexico and Canada looks like it is on better terms. But all eyes continue to be on China and whether they buy U.S. pork products,” said Jeff French, livestock analyst with Top Third Ag Marketing.

CME June lean hog futures closed 0.625 cent lower at 91.75 cents/lb. while actively traded July hogs ended unchanged at 93 cents (all figures US$). Deferred-month contracts were as much as 0.75 cent higher.

Lean hog prices have been given a lift at times from accelerated Chinese imports of pork from the United States or elsewhere. China has turned into a major pork importer as its domestic herd has been decimated by African swine fever (ASF).

But futures markets remain cautious as the spread of ASF to the U.S. would likely prompt curbs on U.S. pork.

CME live cattle futures were mixed in subdued trading, with the market capped by ample cattle supplies and worries that poor weather would dampen demand for beef over the upcoming Memorial Day weekend, viewed as the start of the summer grilling season.

Cattle were supported, however, by news last week that Japan agreed to eliminate restrictions on U.S. beef that had been in place for 15 years.

Cattle traders are looking ahead to Friday’s U.S. Department of Agriculture cattle-on-feed report, which is expected to show much higher cattle placements from a year ago.

Feeder cattle, however, slumped as corn prices rallied for a sixth straight session and ended at a near-one-year peak.

CME June live cattle settled up 0.075 cent at 111.35 cents/lb., while actively traded August was down 0.4 cent at 108.525 cents.

CME August feeder cattle ended down 0.725 cent at 144.775 cents/lb.

— Reporting for Reuters by Karl Plume in Chicago.