Source: Financial Post
U.S. lean hog futures closed higher on Thursday on rekindled hopes for a U.S. trade deal with China, the world’s top pork consumer, traders said.
Recent strength in cash hog markets added support, although prices in the closely watched Iowa and southern Minnesota market fell on Thursday afternoon after rising in six of the last seven days.
Chicago Mercantile Exchange (CME) February lean hog futures settled up 0.925 cent at 68.650 cents per pound.
Hog futures as well as grains, crude oil futures and Wall Street equity markets got a boost on Thursday after U.S. President Donald Trump said the United States was “very close” to nailing down a trade deal with China, the world’s largest soybean importer and a major buyer of U.S. pork and other agricultural products.
After the CME close, Reuters reported that the United States had reached a deal in principle with Beijing.
“It’s surprising hogs were not up more, considering (that) they have reacted more strongly to this kind of news in the past,” Brock Associates analyst Doug Houghton said.
“The cash hog market has been firming up as well, so that supported prices, although the wholesale pork market was weaker today,” Houghton said.
The U.S. pork cutout fell $1.53 per cwt late Thursday, driven by declines in prices for loins and bellies.
CME live cattle futures closed mostly lower, with the benchmark February contract down 0.225 cent at 125.100 cents per pound. January feeder cattle futures fell 0.225 cent to settle at 142.550 cents per pound.
“The cash market is extremely quiet; (there are) hardly any packer bids out there,” Houghton said.
Sagging wholesale beef prices hung over the cattle market. The U.S. Department of Agriculture (USDA) reported the choice boxed beef cutout value on Thursday afternoon at $215.65 per cwt, down $3 from late Wednesday, while select cuts were down $1.16 at $202.56 per cwt.