January 10, 2018 / 11:02 PM / 2 months ago

LIVESTOCK-NAFTA worries drag CME hogs from one-year high

    By Theopolis Waters
    CHICAGO, Jan 10 (Reuters) - Chicago Mercantile Exchange lean
hogs        on Wednesday slid from a one-year top earlier in the
session, rattled by fund selling and Canadian government
concerns over NAFTA talks with the United States, said traders.
     Canada is increasingly convinced that President Donald
Trump will soon announce the United States intends to pull out
of the North American Free Trade Agreement, two government
sources said on Wednesday.             
     Mexico and Canada are among the top destinations for U.S.
pork exports.
     "If it (NAFTA) does go away, the hog markets are going bear
the brunt of the selling," said independent CME livestock
futures trader Dan Norcini.
    Short-covering and the six-session run up in prices for
slaughter-ready, or cash, hogs freed CME hogs from session lows.
    Packers competed for supplies for the first full week of
production after the winter holidays, said traders and analysts.
    Increased week-over-week hog weights suggest holiday plant
disruptions and frigid weather backed up pigs on farms, a
Midwest hog dealer said.          
    Market participants are tracking more wintry weather
entering the Midwest that could hurt hog production in the
    February         hogs settled down 0.650 cents per pound at
72.525 cents. April         ended 1.000 cent lower at 75.775
    Lower cash and wholesale beef values pressured CME live
cattle futures, said traders.
    They said sell stops and fund liquidation contributed to
market losses.
    Wednesday was the third of five days in which funds in CME's
livestock markets that follow the Standard & Poor's Goldman
Sachs Commodity Index          , "rolled," or sold February
positions and simultaneously bought deferred months.
    February         live cattle finished 0.800 cent per pound
lower at 116.875 cents. April         ended 0.850 cent lower at
118.675 cents.
    Since last Friday packers paid $118 to $120 per cwt for cash
cattle in the U.S. Plains that the week before fetched about
$123. Animals at Wednesday's Fed Cattle Exchange brought $119.  
    Moderating temperatures in the Plains could make it easier
to sort and load livestock onto trucks headed for packing
plants. And warmer weather tends to cause cattle to add weight
quicker, making them more available to processors.
    The recent wholesale beef price rally may have discouraged
retail meat buyers, a trader said.
    Sell stops, technical selling and lower live cattle futures
sank CME feeder cattle contracts.
    January         feeder cattle closed 1.100 cents per pound
lower at 144.375 cents.

 (Reporting by Theopolis Waters; Editing by Tom Brown)
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