Cattle and Hog Futures Decline on Worries About Beef, Pork Exports
By Julie Ingwersen, Reuters
Chicago Mercantile Exchange live cattle futures fell more than 1% on Wednesday on technical selling, softer cash cattle markets this week and worries about export demand for U.S. beef, traders said.
CME February live cattle fell 1.725 cents to settle at 136.575 cents per pound, just below the contract's 50-day moving average near 136.7. CME benchmark March feeder cattle futures ended down 1.925 cents at 164.475 cents per pound.
Commodity funds hold a net long position in CME live cattle and lean hog futures, leaving both markets vulnerable to long liquidation toward the end of the year.
China's customs administration said it will allow imports of some Brazilian beef products to resume, ending an embargo in force since Sept. 4. Brazil had suspended shipments to its No. 1 customer China after confirming cases of atypical mad cow disease. read more
"This might be a part of the reason that the cattle (futures) are seeing some stronger selling pressure today. Beef exports to China from the U.S. have been quite strong recently," said Dan Norcini, an independent livestock trader.
Wholesale boxed beef prices extended their slide, with choice cuts down $0.46 at $260.26 per cwt, the lowest since early April, according to the U.S. Department of Agriculture.
CME lean hog futures closed lower for a third straight session, pressured by news that China will raise import tariffs on most pork products next year.
CME February hogs settled down 0.750 cents at 79.325 cents per pound.
China had lowered its tariffs on frozen pork in 2020 as the country faced soaring meat prices in the aftermath of a devastating outbreak of African swine fever, a pig disease. But China has rapidly expanded domestic production, curbing its needs for imports. read more
"It's telling what their current supply situation is with regard to pork. They may not be big buyers in the first half of next year," said Altin Kalo, economist at Steiner Consulting Group.
On a supportive note for futures, U.S. wholesale pork values rose, with the carcass priced at $87.83 per cwt, up $2.35 from Tuesday, the USDA reported.
