CHICAGO, Jan 28 (Reuters) - U.S. hog contacts firmed on Tuesday, edging off a 5-1/2-month low hit on Monday on a mild round of bargain buying.
Cattle futures were mixed, with the most-active fed cattle contracts also bouncing slightly while live cattle futures weakened to the lowest since Oct. 21.
Fears about the spread of a coronavirus in China cast a bearish tone over the market despite a solid fundamental underpinning.
“This thing is a risk off mentality and it is not supply and demand driven,” said Tim Hackbarth, analyst with Top Third Ag marketing in Chicago. “It is a rush for some managed money to get out now and hit the reset button.”
President Xi Jinping said on Tuesday that China was sure of defeating a “devil” coronavirus that has killed 106 people, but international alarm was rising as the outbreak spread across the world.
April live cattle futures dropped 0.475 cent to 120.825 cents per pound at the Chicago Mercantile Exchange. Prices bottomed out at 120.625 cents.
CME March feeder cattle futures ended up 0.225 cent at 135.4 cents per pound after hitting their lowest since Sept. 24.
CME February lean hog futures were up 0.275 cent at 66.225 cents per pound. The most-active April contract ended 0.85 cent higher at 71.3 cents.
Concerns about Chinese demand for U.S. supplies also were contributing to the bearish outlook in livestock.
Brazil meatpacker JBS SA said on Monday afternoon that it had signed a memorandum of understanding with Hong Kong’s WH Group to supply up to 3 billion reais ($717.26 million) of fresh beef, poultry and pork per year to the Chinese market, with the first shipments expected in the first quarter of 2020.
Traders have been waiting for signs of new Chinese purchases of U.S. pork and beef since Washington and Beijing signed a Phase 1 trade pact on Jan. 15.
But Chinese demand tends to slow around the Lunar New Year. (Reporting by Mark Weinraub; Editing by David Gregorio)