July 31, 2019 / 9:42 PM / 2 months ago

LIVESTOCK-CME hogs sink by daily limit, hit three-week low on U.S.-China trade worries

CHICAGO, July 31 (Reuters) - Chicago Mercantile Exchange (CME) hog futures tumbled by the daily, exchange-imposed limit on Wednesday, with the most actively traded contract setting a three-week low, as U.S.-China trade talks ended with no apparent signs of progress.

Cattle futures also slumped as widespread selling hit U.S. agricultural markets on the last day of the month.

American hog farmers suffered after China, the world’s biggest pork consumer, imposed retaliatory tariffs on imports of U.S. pork last year as part of the countries tit-for-tat trade war.

U.S. and Chinese negotiators on Wednesday held their first face-to-face meetings since U.S. President Donald Trump and Chinese President Xi Jinping in June called a ceasefire in the dispute. But talks wrapped up without visible signs of progress.

“The trade is kind of throwing in the towel now on China,” said John Payne, senior futures and options broker for Daniels Trading in Chicago.

“We’re going to keep things friendly, but there’s not going to be a deal.”

CME August lean hog futures settled 2.975 cents lower at 79.325 cents per pound and touched their lowest price since July 16. Most-active October hogs sank the 3-cent limit to 71.000 cents per pound and reached their lowest price since July 9.

Other contract months, including December and February, also dropped by the daily limit. CME will temporarily expand the limit to 4.5 cents on Thursday.

U.S. meat companies expect that the deaths of millions of pigs in China from a fatal hog disease, African swine fever, will eventually prompt Chinese buyers to import more American pork. But traders are still waiting for major sales.

“There’s not a lot of business that’s moving,” Payne said. “We’re inundated with supply right now.

Traders on Thursday will assess weekly U.S. Department of Agriculture export sales data for evidence of increased Chinese meat demand.

Massive culling of hogs in China because of African swine fever is also “a major source of uncertainty” for animal feed suppliers, Bunge Ltd Chief Executive Officer Greg Heckman said.

In U.S. cattle markets, futures continued to feel pressure from weak cash prices, traders said.

CME August live cattle futures ended 1.200 cents lower at 106.900 cents per pound. October live cattle fell 1.425 cents to 107.650 cents per pound.

CME August feeder cattle slid 1.575 cents to 141.525 cents per pound. September feeders shed 1.600 cents to 142.450 cents per pound. (Reporting by Tom Polansek in Chicago; editing by Grant McCool)

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