November 12, 2018 / 10:54 PM / in 6 months

LIVESTOCK-Lean hogs rally on demand outlook, swine fever concern

CHICAGO, Nov 12 (Reuters) - Chicago Mercantile Exchange lean hog futures rallied more than 1 percent on Monday on improving seasonal demand for pork and on concerns about the spread of African Swine Fever in China, traders said.

Live cattle futures, meanwhile, were mostly lower on seasonally easing demand and as traders unwound intermarket spreads by selling cattle futures and buying hogs.

“We typically have a more favorable seasonal (demand) starting here for the pork, for the hams. We tend to have a tougher seasonal in the fourth quarter for the beef,” said Mike Zuzolo, president of Global Commodity Analytics.

The spread between front-month live cattle and front-month hogs expanded last week to the widest since April. As a result, hog futures could continue to outperform cattle contracts in the coming weeks, Zuzolo said.

More news of the expanding African Swine Fever outbreak in China, the world’s top hog and pork producer, kept the market on edge.

Major Chinese animal feed maker Tangrenshen Group said Sunday that feed produced by one of its units had been contaminated with the disease in the first reported contamination of feed supplies in the country.

Lean hogs also drew support from the December contract’s discount to the CME lean hog index, which most recently stood at 62.77 cents.

CME December hogs gained 0.750 cent to settle at 56.550 cents per pound, while the more active February hog contract was up 2.025 cents at 61.525 cents.

CME December live cattle settled up 0.350 cent at 114.925 cents per pound after tumbling 1.8 percent on Friday. Deferred contracts were as much as 0.200 cent lower.

Wholesale beef prices edged higher after two days of declines raised concerns about flagging demand for beef. Choice cuts gained 35 cents on Monday to $215.55 per cwt, according to the U.S. Department of Agriculture.

CME January feeder cattle futures fell 0.075 cent to 143.725 cents per pound, lowest since June 27. (Reporting by Karl Plume Editing by James Dalgleish)

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