CHICAGO, Nov 6 (Reuters) - Chicago lean hog futures fell as much as 5 percent on Tuesday, under pressure from abundant supplies and weaker prices in the Midwestern cash hog market, traders and analysts said.
Front-month December hog futures eased by the most since July, settling down the 3.000-cent daily price limit at 54.100 cents per pound. The February contract was down 2.725 cents to 61.400 cents, a decline 4.3 percent.
U.S. pork exports to top market Mexico have declined for months after Mexico imposed tariffs on imports in response to American tariffs on steel and aluminum. Pork exports to China are down sharply this year due to the U.S.-China trade war, and the declining shipments overseas left more supplies for the domestic market.
An outbreak of the highly contagious African swine fever in China has forced Chinese hog producers to cull herds. Analysts expect the disease to force China to import more pork, but that has not happened yet.
“We quit reacting positively to African swine fever,” U.S. Commodities analyst Don Roose said of the declines in hog futures. “The supply is big and demand has not changed.”
Prices have declined three days in a row in the closely watched Iowa and southern Minnesota cash hog market, U.S. Department of Agriculture data showed.
“The cash hog market tone remains weak with packers having little trouble meeting slaughter needs,” brokerage Brock and Associates said in a note to clients.
Heavy calendar spread trading in both hogs and cattle remained a dominant factor as traders continued exiting front-month positions and roll into deferred months.
Wednesday was expected to be the first day of the five-session roll for funds tracking Standard & Poor’s Goldman Sachs Commodity Index. Some traders were adjusting positions to take advantage of potential opportunities during the so-called Goldman roll.
Both live and feeder cattle futures were narrowly mixed as prices stabilized after cattle contracts fell to the lowest levels in more than a month on Monday.
Chicago Mercantile Exchange December live cattle was up 0.100 cent to 115.425 cents per pound and CME January feeder cattle was up 0.175 cent to 146.600 cents.
Reporting by Michael Hirtzer Editing by Leslie Adler