U.S. livestock: Profit-taking, trade war fears upend CME hogs

Chicago | Reuters — Chicago Mercantile Exchange hog futures closed lower on Thursday, rocked by profit-taking amid worries that pork could suffer from retaliatory tariffs against the U.S., traders said.

June hogs closed 0.7 cents/lb. lower at 76.625 cents (all figures US$). July ended 2.075 cents lower at 78.05 cents.

Mexico threatened to reciprocate with immediate duties on various U.S. goods, including some pork products, with Washington set to slap import tariffs on Mexican steel and aluminum by Friday.

“This is a trade and Mexico retaliation problem,” Allendale Inc. chief strategist Rich Nelson said regarding CME hogs’ retreat.

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By volume, Mexico is the leading importer of U.S. pork, according to industry analysts.

CME hog contracts were further pressured by their price premiums compared to costs for market-ready, or cash, hogs.

However, upward-trending cash prices and higher costs for pork at wholesale on Thursday limited June hog contract losses, said analysts and traders.

Cattle futures turn lower

Live cattle contracts at the CME settled lower on technical selling and profit-taking following the market’s three-cent limit-up spike on Wednesday that expanded Thursday’s limit to 4.5 cents, said traders.

Futures were undervalued relative to cash cattle prices, which lifted contracts from session lows, they said.

June live cattle closed 1.075 cents per pound lower at 105.05 cents. August ended down 0.5 cent at 103.95 cents. Futures will return to their normal three-cent limit on Friday.

Packers on Thursday paid mostly $110/cwt for slaughter-ready, or cash, cattle in the U.S. Plains. That was nearly par with last week’s sales in Kansas and Nebraska, said feedlot sources.

Feedyards resisted taking less money for cattle given record-high packer profits and supermarkets buying beef for June 17 Father’s Day demand, said traders and analysts.

Meanwhile, potential U.S. tariffs on Canadian metal prompted that country to list duties on goods from the U.S., that could include some prepared beef items, after a 15-day public comment period.

“Just the talk about beef and trade wars made the market go a little crazy today,” a trader said, referring to some of Thursday’s CME live cattle bearishness.

Analysts cited Canada among the top five destinations for U.S. beef.

CME live cattle futures losses and steady-to-lower cash feeder cattle prices pulled down the exchange’s feeder cattle market.

August closed 1.15 cents/lb. lower at 147.4 cents.

— Reporting for Reuters by Theopolis Waters in Chicago.

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