CHICAGO, Aug 8 (Reuters) - Chicago Mercantile Exchange (CME) lean hog futures posted strong gains for a second consecutive session on Thursday, lifted by short-covering and technical buying following the market’s recent drop.
Rising pork prices and solid pork exports supported the market, largely diluting concerns over U.S. trade tensions with China, the world’s top hog and pork market.
China has suspended all U.S. agricultural product purchases after U.S. President Donald Trump labeled the country a currency manipulator and vowed to slap more tariffs on Chinese goods next month if there is no progress toward a trade deal.
China bought a small amount of U.S. pork last week ahead of the latest escalation of the trade war, according to U.S. government data issued on Thursday.
Although the suspension of U.S. agricultural product purchases may keep a lid on new sales, shipments of previous orders is expected to continue. China has yet to take delivery of nearly 103,500 tonnes of U.S. pork bought before trade tensions ramped up.
Some analysts and traders believe China will also return to the market in coming months as the country’s African swine fever outbreak has drastically cut production of pork, China’s favorite meat.
“Perhaps we’ve overdone the expectation that China will never buy U.S. pork again,” said Rich Nelson, chief strategist with Allendale Inc. “Most people would probably say that China will have to come back at some point and buy U.S. pork.”
U.S. pork prices remain strong, with the latest carcass cutout value PRK-MAN-CARCS at $88.69 per cwt, just 4 cents below a 3-1/2 month peak posted on Tuesday.
CME October hogs ended the day up 1.025 cents at 67.875 cents per pound.
August lean hogs, the only losing contract, settled down 0.375 cent at 77.350 cents per pound. The contract continues to hold a large discount to the CME lean hog index of 83.43. The two must converge by the futures contract’s expiration on Aug. 16.
Live cattle futures also edged upward, underpinned by expectations for steady cash market prices this week and futures’ discount to cash prices.
CME August live cattle ended the day up 0.350 cent at 107.950 cents per pound and October rose 0.300 cent to 106.750 cents per pound.
CME August feeder cattle ended 0.300 cent higher at 139.850 cents per pound while September was up 0.500 cent at 139.875 cents per pound. (Reporting by Karl Plume in Chicago; Editing by David Gregorio)