CHICAGO, April 3 (Reuters) - Chicago Mercantile Exchange lean hogs on Tuesday tumbled for a second straight day, dragged down by slumping cash hog prices and China’s additional 25 percent tariff on U.S. pork imposed on Monday, said traders.
The Chinese raised duties on pork, and more than 100 other U.S. products, after the United States levied higher duties on Chinese steel and aluminum.
In 2017 China/Hong Kong was the second-largest volume market for U.S. pork at 495,637 tonnes, according to the U.S. Meat Export Federation (USMEF).
Late on Monday USMEF said in a statement that it regrets China’s decision to implement the higher tariffs and is hopeful that it can be rescinded quickly.
Increased Chinese tariffs come as hog farmers grapple with seasonally slumping prices for their livestock and record hog supplies to accommodate four new packing plants that came online since late last year.
Still, bullish market participants expect hog prices to soon bottom out as post-Easter holiday grilling gets underway and end-user demand for pork bellies increases in preparation for the summer bacon-lettuce-tomato sandwich season.
April hogs closed down 2.600 cents per pound at 51.675 cents, and May ended 3.625 cents lower at 61.200 cents.
CME hogs on Wednesday will resume its normal 3.000 cents daily price limit after failing to settle up or down Tuesday’s 4.500 cent expanded limit.
CME live cattle slid for a third consecutive session on tepid wholesale beef demand, weaker cash prices and increased supply expectations, said traders.
Futures were further pressured by funds that continued to liquidate their long positions.
“The cattle futures will stop going down and post a sharp rebound when the managed money/fund selling stops,” Hales Cattle Letter author David Hales wrote to clients.
April futures losses were limited by its discount to prices for slaughter-ready, or cash, cattle so far this week.
On Tuesday cash cattle in the U.S. Plains traded from $116 to $118 per cwt, down from mostly $120 to $121 a week earlier amid slack beef demand and plentiful supplies.
Investors await the results of Wednesday’s Fed Cattle Exchange auction of 373 animals.
April live cattle closed down 0.425 cent per pound at 111.975 cents, and June ended down 1.325 cents at 99.625.
Steady to weaker cash feeder cattle prices and lower cattle futures pulled down CME’s feeder cattle contracts.
April closed 1.350 cents lower at 130.525 cents. (Reporting by Theopolis Waters; Editing by Lisa Shumaker)