U.S. livestock: Deferred hog futures set contract highs for fourth day

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Chicago | Reuters — U.S. hog futures set new contract highs in deferred months for a fourth consecutive day on Thursday on expectations of increased demand from China, before prices pulled back.

Deferred feeder cattle futures also set contract highs.

An outbreak of African swine fever in China fueled the temporary advances in deferred hog contracts, as analysts expect Chinese buyers will further ramp up pork imports to compensate for pigs killed by the incurable hog disease.

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The U.S. Department of Agriculture reported China bought 23,473 tonnes of U.S. pork in the week ended April 11, accounting for 71 per cent of total U.S. weekly export sales. That was China’s third biggest purchase since USDA began tracking sales in 2013.

African swine fever – deadly in pigs but harmless for humans – has spread rapidly through China, which accounts for about half of global pork output, since the first outbreak was reported last August.

“The China pork story is still alive,” said Rich Nelson, chief strategist for U.S. broker Allendale.

Nearby futures contracts ended higher, in a turnaround from recent setbacks. Most-active Chicago Mercantile Exchange June lean hog futures rose 0.625 cent to 96.75 cents/lb. (all figures US$).

October hogs lost 0.225 cent to 94.35 cents/lb. after setting a contract high of 95.3. December hogs set a contract high of 90.2 cents/lb. before closing flat at 89.725 cents/lb.

Gains in the hog market and firmer cash cattle prices helped underpin cattle futures, analysts said.

USDA, in a monthly report, said 11.964 million head of cattle were being fed for the slaughter market as of April 1, up two per cent from a year earlier. That was slightly above analysts’ expectations for an increase of 1.7 per cent.

Cattle placements in feedlots during March were 2.014 million head, up five per cent from a year earlier. That was above analysts’ estimates for an increase of 3.4 per cent.

Data was slightly bearish, but firmer cash cattle prices could underpin futures on Monday, Nelson said.

In Nebraska, for example, fed cattle traded about $128-$130/cwt this week, up from about $127 last week, traders said.

CME June live cattle futures rose 0.3 cent to 122.675 cents/lb. August live cattle futures neared a one-month high and closed up 0.2 cent at 119.75 cents/lb.

August feeders set a contract high of 161.4 cents before ending up 0.225 cent at 160.675 cents.

— Tom Polansek reports on agriculture and ag commodities for Reuters from Chicago.

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