Chicago | Reuters — U.S. lean hog futures rebounded on Wednesday after two sessions of declines as improving meat packer margins and hopes for more pork sales to China buoyed the market.
Traders are anticipating more pork sales to China following surprise sales to the world’s largest hog and pork market last week.
Washington and Beijing also struck a trade war truce deal last weekend that the White House said would feature immediate purchases of U.S. agricultural product, which traders said could include U.S. pork.
China has been battling a severe outbreak of African swine fever that has killed hundreds of hogs. Three more cases were announced on Wednesday.
China expressed confidence on Wednesday that it can reach a trade deal with the United States, but new sales of pork or other agricultural commodities are yet to be confirmed by either country.
“Right now there’s just a lot of uncertainty on the China front and that’s part of the reason we’re chopping around. Overall, the strong packer margins and the expected seasonal decrease in the hog supplies are positives,” said Doug Houghton, analyst with Brock Associates Inc.
Chicago Mercantile Exchange February lean hogs settled up 1.7 cents at 67.75 cents/lb., recovering all of the declines from the previous two sessions (all figures US$). April hogs gained 1.375 cents to 72.125 cents.
Average pork packer margins on Wednesday expanded to $38.05 per head, up from $29.80 a week ago, according to HedgersEdge.com.
Live cattle futures also advanced on technical buying and on expectations for firm cash cattle prices at U.S. Plains feedlot markets this week.
Active trading has yet to develop this week at Plains fed cattle markets, but prices are expected to be at least steady with last week’ sales at $117-$118/cwt.
Harsh winter weather in the Plains has also raised some concerns about reduced weight gain rates and difficulty moving cattle.
CME February live cattle futures settled up 0.725 cents at 122.375 cents/lb., holding chart support at its 50-day moving average.
Feeder cattle futures tracked live cattle higher, with January futures up 1.075 cent at 145.475 cents.
— Karl Plume reports on agriculture and ag commodities for Reuters from Chicago.