Lean hog futures saw a robust rally at the Chicago Mercantile Exchange on Monday, buoyed by reports of a trade dispute between China and the European Union. Market participants and analysts noted that while this development provided a psychological boost to contracts, its direct impact on U.S. producers’ competitive position was viewed as limited.
In contrast, cattle futures displayed a mixed performance. Traders cited higher wholesale prices and expectations of constrained cattle supplies in the upcoming autumn months as factors supporting the market.
China’s announcement of an anti-dumping investigation into imported pork and its by-products from the EU, targeting countries like Spain, the Netherlands, and Denmark, added a new dimension. This move, seemingly a response to restrictions on Chinese electric vehicle exports, specifically targets pork intended for human consumption such as whole cuts and various organs. The investigation, slated to commence on June 17, coincides with ongoing efforts by China to reduce its sow herd, according to Karl Setzer, a partner at Consus Ag.
Despite these developments, U.S. pork exports to China continue to face a 25 percent retaliatory tariff stemming from the Section 232 tariffs on steel and aluminum imposed during the U.S.-China trade tensions under the Trump Administration.
Rich Nelson, chief strategist at Allendale Inc., highlighted the significance of these factors in influencing market sentiment. “Many traders have been eagerly seeking signs of a turnaround in the hog market, and this news served as a catalyst,” he commented.
In the meantime, U.S. pork wholesale prices softened. The U.S. Department of Agriculture reported a decrease in the pork carcass cutout price to $98.38 per hundredweight (cwt) on Monday morning, down $2.97 from the previous Friday. Prices for pork bellies, loin, butt, and ribs also trended lower.
Closing figures from the Chicago Mercantile Exchange showed July lean hog futures (LHN24) ending 1.725 cents higher at 95.375 cents per pound, after peaking at 95.825 cents per pound earlier in the session—the highest level since June 17. August live cattle futures (LCQ24) settled slightly lower by 0.375 cent at 182.800 cents per pound, while August feeder cattle futures (FCQ24) concluded down 0.650 cents at 261.325 cents per pound.
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