December 10, 2019

CME hog futures highest in more than two weeks after China tariff waiver offer

Lean hog futures on the Chicago Mercantile Exchange (CME) ended down 0.025 cent at 67.550 cents per pound, reaching its highest price since November 19, 2019 before pulling back, reported Reuters.

This comes after China announced tariff waivers on United States soybean and pork, as hopes for a new deal between both countries to end the 17-month trade war are being discussed.

US swine sales to China could increase after a trade deal, as US pork have a 72% imposed levy currently in response to US tariffs on China products.

US and China industry sources believe the waiver is an official announcement of tax exemptions on US imports – up to 10 million tonnes of US soybeans in addition to unspecified quantities of pork, which was offered to importers earlier this year.

China's tariffs on the US has given an advantage to swine producers in South America and Europe, as China seeks to supplement dwindling supplies of pork in the country due to the African swine fever outbreak.

The US Meat Export Federation is seeking clarification on China's tariff waivers. 

According to livestock marketing advisory service HedgersEdge.com, Margins for meat packers increased to US$66.80 per head for hogs from US$65.95 on December 5, 2019, although it was lower compared to US$71.15 one week prior. As for cattle, margins eased to US$171.05 per head from US$185.65 on December 5, 2019 and US$265.20 compared to one week prior.

According to the US Department of Agriculture, about 2.8 million swine are expected to be slaughtered through December 7, 2019, higher than the 2.6 million swine slaughtered in 2018. 679,000 cattle will be slaughtered compared to 669,000 in 2018.

February live cattle on the CME went up 0.375 cent to 124.975 cents per pound. Feeder cattle futures for January also went up 1 cent to 141.550 cents per pound.

-  Reuters