CHICAGO, Jan 11 (Reuters) - Chicago Mercantile Exchange hog futures on Thursday shed more than 2 percent of their value on Thursday, partly pressured by Canadian government worries that U.S. President Donald Trump intends to scrap NAFTA talks, said traders.
Canadian government sources told Reuters on Wednesday they were increasingly convinced the United States plans to announce it intends to pull out of the North American Free Trade Agreement (NAFTA).
Of greater concern to U.S. pork producers is the potential loss of a lucrative export partner if Mexico leaves NAFTA should Trump decide to trigger the 6-month process to withdraw from the trade pact.
CME hog futures on Thursday settled 2.3 percent lower, and posted its biggest one-day loss since mid-November, as the NAFTA cloud of uncertainty hung over the market.
“It shouldn’t be a shock that the hogs were lower today given this information, when nearly 30 percent of our exports go to our neighbor to the South,” said Global Commodity Analytics & Consulting LLC President Mike Zuzolo.
Through November, last year’s pork exports to Mexico totaled 726,717 metric tons, which accounted for nearly a third of the total U.S. export volume and valued at $1.37 billion, according to the U.S. Meat Export Federation (USMEF).
During that period Canada was the fourth-largest U.S. pork destination in both volume and value, with total shipments from the United States at 190,592 metric tons worth $723.4 million, said USMEF.
“It sure seems like the fear of NAFTA has overwhelmed the hog market today,” said Rosenthal Collins broker James Burns. He does not believe Trump will actually pull out of NAFTA and chalks up the threat as Trump’s aggressive negotiating style.
“He’s (Trump) going to ask for the world. He knows where he wants to be and he’s going to negotiate until he gets what he wants,” said Burns. (Reporting by Theopolis Waters; Editing by Richard Chang)