May 31, 2018 / 10:44 PM / a year ago

LIVESTOCK-Profit-taking, trade war fears upend CME hog futures

    CHICAGO, May 31 (Reuters) - Chicago Mercantile Exchange hog
futures        closed lower on Thursday, rocked by profit-taking
amid worries that pork could suffer from retaliatory tariffs
against the United States,  traders said.
     June         hogs closed 0.700 cents per pound lower at
76.625 cents. July         ended 2.075 cents lower at 78.050
     Mexico threatened to reciprocate with immediate duties on
various U.S. goods, including some pork products, with
Washington set to slap import tariffs on Mexican steel and
aluminum by Friday.             
     "This is a trade and Mexico retaliation problem," Allendale
Inc chief strategist Rich Nelson said regarding CME hog's
     By volume, Mexico is the leading importer of U.S. pork,
according to industry analysts. 
     CME hog contracts were further pressured by their price
premiums compared to costs for market-ready, or cash, hogs.
     However, upward-trending cash prices and higher costs for
pork at wholesale on Thursday limited June hog contract losses,
said analysts and traders.                   
     Live cattle contracts at the CME settled lower on technical
selling and profit-taking following the market's 3.000-cent
limit-up spike on Wednesday that expanded Thursday's limit to
4.500 cents, said traders.
     Futures were undervalued relative to cash cattle prices,
which lifted contracts from session lows, they said.
     June         live cattle closed 1.075 cents per pound lower
at 105.050 cents. August         ended down 0.500 cent at
103.950 cents. Futures will return to their normal 3.000-cent
limit on Friday.
     Packers on Thursday paid mostly $110 per cwt for
slaughter-ready, or cash, cattle in the U.S. Plains. That was
nearly par with last week's sales in Kansas and Nebraska, said
feedlot sources.
     Feedyards resisted taking less money for cattle given
record-high packer profits and supermarkets buying beef for June
17 Father's Day demand, said traders and analysts.
     Meanwhile, potential U.S. tariffs on Canadian metal
prompted that country to list duties on goods from the United
States, that could include some prepared beef items, after a
15-day public comment period.             
     "Just the talk about beef and trade wars made the market go
a little crazy today," a trader said, referring to some of
Thursday's CME live cattle bearishness.
     Analsyts cited Canada among the top five destinations for
U.S. beef.
     CME live cattle futures losses and steady-to-lower cash
feeder cattle prices pulled down the exchange's feeder cattle
    August         closed 1.150 cents per pound lower at 147.400

 (Reporting by Theopolis Waters; Editing by Cynthia Osterman)
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