September 13, 2019 / 7:48 PM / 3 months ago

LIVESTOCK-CME lean hogs soar daily limit as China exempts U.S. pork from additional tariffs

CHICAGO, Sept 13 (Reuters) - U.S. lean hog futures climbed by an expanded daily limit on Friday as China said it would exempt American pork from additional tariffs imposed during its trade war with the United States.

The exemptions raised hopes for Chinese buying and were seen as the latest sign of easing Sino-U.S. tensions before a new round of talks aimed at curbing the bruising trade dispute.

China has imposed three rounds of retaliatory tariffs on U.S. pork, including 25% increases in April and July 2018 and a 10% bump this month, raising the total duty to 72% from 12% before the trade war.

It was not immediately clear if Beijing would suspend some or all of the tariffs, which have sliced U.S. export sales to China, the world’s top pork consumer.

China has the potential to further increase imports because an outbreak of deadly African swine fever has cut its pig herd by a third since mid-2018, traders said. The trade war and Beijing’s tariffs have been a hurdle for U.S. suppliers, though.

“The real winner in a trade resolution with China may be the pork industry,” said Karl Setzer, commodity market risk analyst for Agrivisor.

Chicago Mercantile Exchange (CME) October lean hogs jumped 3.3 cents to 66.475 cents per pound and reached a one-week high. December lean hogs soared the maximum 4.5 cents to a six-week high of 68.700 cents per pound. February hogs also climbed the daily trading limit.

The exchange temporarily increased the limit to 4.5 cents after the market shot up by the standard 3-cent limit on Thursday. The expanded limit will remain in place on Monday.

Beijing said on Thursday that Chinese firms had started to inquire about prices for U.S. farm goods and that possible purchases included pork.

“It was the China discussion that really provided the catalyst here,” said Mike Sands, an independent U.S. livestock market analyst.

Cattle futures traded mixed but seem to have bottomed after recent declines, brokers said.

Futures and cash prices fell after a fire at a Tyson Foods slaughterhouse in Holcomb, Kansas, in August removed a key buyer from the market.

Cash cattle prices firmed as this week progressed, helping to support futures, traders said. Cash cattle traded in the southern Plains for $99 per cwt, compared to $100 a week ago, Sands said.

CME October live cattle futures ended down 0.650 cent at 98.075 cents per pound. October feeder cattle rose 0.075 cent to 134.575 cents per pound. (Reporting by Tom Polansek in Chicago Editing by Tom Brown)

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