CHICAGO, Nov 12 (Reuters) - U.S. lean hog futures rose by as much as 3% on Tuesday on technical buying and short-covering, and as hopes for expanded pork exports to China more than offset pressure stemming from ample U.S. hog supplies, traders said.
Rising pork prices and strong meatpacker margins gave the market further support following a recent drop in hog futures to multi-month lows.
Hog traders are closely following trade negotiations between the United States and China as pork exports appear likely to benefit. China needs imported pork because African swine fever has decimated its hog herd, but retaliatory tariffs on U.S. shipments to China remain in place.
U.S. President Donald Trump on Tuesday dangled the prospect of completing an initial trade deal with China “soon,” but offered no new details on negotiations.
“We’ve got really large supplies. But, on the other side of that, demand is really supposed to pop up with the Chinese,” said Don Roose, president of U.S. Commodities.
“President Trump talked tough on China today, but at the same time said we’re close to a deal. The market wanted to run with it but wasn’t quite sure,” Roose said.
Traders are awaiting confirmation of any new pork sales to China, as well as loadings of recently purchased meat, he said.
Chicago Mercantile Exchange (CME) December lean hogs, which hit a two-month low on Monday, ended 1.425 cents higher at 64.725 cents per pound.
February hogs climbed 1.825 cents to a three-week high of 75.550 cents per pound after holding technical support at its 100-day moving average and breaking through chart resistance at its 20- and 50-day averages.
Tightening global pork supplies have lifted U.S. pork prices this autumn, a time when they would typically decline, the CEO of meatpacker Tyson Foods said.
The wholesale pork cutout price jumped $2.19 on Tuesday to $88.53 per cwt, up $9.03 from a week ago, U.S. Department of Agriculture data showed.
Pork packer margins swelled to $84.55 per head, up from $60.45 a week ago, livestock marketing advisory service HedgersEdge.com said.
CME live and feeder cattle futures ended mixed as cash market prices remain firm, but traders questioned how much further the market could climb.
Actively traded February live cattle futures, which touched a 6-1/2 month high on Monday, closed down 0.100 cent at 125.575 cents per pound. January feeder cattle ended unchanged at 147.125 cents per pound, a six-month high.
Reporting by Karl Plume in Chicago Editing by Marguerita Choy