December 16, 2019

 

CME cattle and lean hog futures boosted after US-China trade agreement

However, prices pared gains as the specifics of the United States-China "phase one" trade agreement are unclear, with traders struggling, reported Reuters.

 

Robert Lighthizer, US Trade Representative said China has pledged to purchase US$32 billion worth of US agricultural products over the next two years, or US$16 billion higher than the US$24 billion dollar baseline of China's US purchases in 2017.

 

While broad targets for China's US purchases will be publicly released, specific imposed purchasing targets will be kept confidential to avoid distorting markets, said Lighthizer.

 

He added that China will buy US$5 billion more in agricultural products from the US every year in addition to its two year pledge.

 

Lean hog futures on the Chicago Mercantile Exchange (CME) hit 0.850 cent at 69.500 cents per pound, lower by 2 cents from its session high 71.550 cents as traders analysed trade agreement news.

 

Dan Norcini, independent livestock trader said nobody knows the details of the US-China "phase one" trade agreement, which has derailed the CME lean hog futures market.

 

Commodity funds have created a net short position on CME lean hog futures with Chinese demand ambiguous and supplies of US hogs and pork abundant.

 

Norcini said the funds can't run out of the CME unless there's solid evidence of China purchasing large quantities of US pork or once specific details of the agreement has been made known.

 

Cattle futures on the CME posted highs of 127.900 cents before settling up 2.450 cents at 127.550 cents per pound.

 

Feeder cattle futures for January hit 145.657 cents per pound, up 3.125 cents.

 

-  Reuters