June 5, 2018 / 9:00 PM / 2 months ago

LIVESTOCK-CME hog futures slump following Mexico tariff news

    CHICAGO, June 5 (Reuters) - Some Chicago Mercantile Exchange
hog        contracts on Tuesday fell more than 2 percent at one
point after Mexico announced it imposed tariffs on U.S. pork,
traders said.
    Mexico imposed tariffs on American products ranging from
steel to pork and bourbon in retaliation for higher import
duties by Washington on Mexican metals.             
    The U.S. exports a significant amount of bone-in hams to
Mexico for de-boning because of cheaper labor, Linn Group
analyst John Ginzel said. The finished product is either
consumed domestically, exported elsewhere or returned to the
United States as a muscle cut.
    In 2017 Mexico was the largest volume market for U.S. pork
exports at more than 800,000 tonnes worth $1.51 billion,
according to the National Pork Producers Council.
    CME hog contracts settled off session lows amid bargain
buying stirred by higher prices for wholesale pork and
market-ready, or cash, hogs.                  
    Packers competed for hogs while keeping pace with spring
grilling demand and retail buying ahead of June 17 Father's Day
advertisements, said analysts and traders.
    Processors may soon resist paying more for supplies after
their margins recently slipped into single digits, they said.
       
    June         hogs closed 1.050 cents per pound lower at
76.525 cents. July         ended 0.900 cent lower at 77.025
cents.
    
    LIVE CATTLE FUTURES RALLY
    Short-covering and technical buying rallied CME live cattle
futures from Monday's losses, traders said.
    Optimism regarding this week's cash prices and investors'
buying cattle contracts and simultaneously selling hog futures
enhanced CME live cattle market advances, they said.
    June         live cattle closed 2.475 cents per pound higher
at 107.200 cents. August         ended up 1.600 cents at 104.050
cents. 
    On Tuesday packers in Texas and Kansas posted bids of $107
per cwt for slaughter-ready, or cash, cattle against feedlots
asking $114 to $115. The bulk of cash cattle last week in the
Plains brought $110.
    Market participants await Wednesday's Fed Cattle Exchange
sale of 568 animals. Cattle there last week fetched $110 per
cwt.
    Cash cattle prices may have bottomed out seasonally and beef
demand may improve, at least until consistently hot summer
weather curbs enthusiasm for cooking outdoors.           
    "It's not fun standing next to a hot grill in 100-degree
weather," a trader said.
    Higher cash feeder cattle prices and buying in the
neighboring live cattle market boosted CME feeder cattle
contracts.
   August         closed 1.500 cents per pound higher at 146.350
cents.

 (Reporting by Theopolis Waters
Editing by Leslie Adler)
  
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