CHICAGO, Oct 17 (Reuters) - U.S. lean hog futures closed lower on Thursday for a second straight session on bearish chart signals and uncertainty about export demand from China, traders said.
China is facing a huge pork shortage due to an outbreak of a fatal pig disease, African swine fever. But so far the country’s purchases of U.S. pork have fallen short of some traders’ expectations.
Chicago Mercantile Exchange December lean hog futures settled down 2.475 cents at 68.150 cents per pound after dipping to 67.725 cents, the contract’s lowest since Oct. 8. February hogs ended down 1.200 cents at 77.650 cents.
“The charts look terrible. The China demand has been disappointing,” said Jeff French, analyst with Top Third Ag Marketing in Chicago.
The U.S. pork cutout fell $1.44 on Thursday afternoon, and cash hog prices in the closely watched Iowa and southern Minnesota market dipped $0.34.
Futures had little reaction to news that Tyson Foods Inc in February will stop buying U.S. hogs raised with ractopamine, a growth drug banned by China.
Some traders see Tyson’s decision, following similar moves by rivals Smithfield Foods and JBS USA, as a precursor to an increase in U.S. pork sales to China.
“Everyone expects these huge purchases. So far, it just hasn’t materialized,” French said.
Traders will monitor the U.S. Department of Agriculture’s weekly export sales report on Friday for any fresh sales to China.
CME live cattle futures closed narrowly mixed on Thursday, with the most-active December contract settling up 0.500 cent at 114.375 cents per pound after reaching 114.425 cents, its highest since July 29, supported by expectations for firmer cash cattle prices.
CME feeder cattle futures closed lower, with the November contract down 1.600 cents at 144.325 cents per pound and the January down 1.525 cents at 140.850 cents.
Both markets were initially pressured by news that Cargill suspended some shifts at a Dodge City, Kansas, beef-packing plant after an explosion injured two employees. However, cattle futures pared losses as Cargill said the plant would soon be fully operational.
Traders were jittery following an August fire at a Tyson slaughterhouse in Holcomb, Kansas, that shut that facility indefinitely, jarring futures markets.
Reporting by Julie Ingwersen, Editing by Sherry Jacob-Phillips