July 31, 2018 / 10:30 PM / a year ago

LIVESTOCK-Hog futures tumble with pork belly prices, despite China hopes

    By Michael Hirtzer
    CHICAGO, July 31 (Reuters) - Chicago Mercantile Exchange
lean hog futures         fell sharply on Tuesday, weighed down
by ample supplies and tumbling prices for pork bellies that are
used for bacon, traders said.
    Front-month August lean hogs        fell 2.175 cents to
61.125 cents per pound, dropping to a life-of-contract low for
the fourth consecutive session. Most-active October hogs       
also hit a lifetime low, finishing down 0.500 cent at 50.725.
    Declines in hog futures came despite a media report that the
United States and China were holding new talks in efforts to
avoid escalations in the trade war that resulted on tariffs on
shipments of U.S. pork, soybeans and other goods into China. 
    Soybean futures        surged over 3 percent on optimism of
the talks, traders said.       
    China has not bought significant amounts of U.S. pork this
year but any additional demand could help alleviate pressure
from abundant supplies of U.S. pork and hogs, traders said.
    U.S. Department of Agriculture showed prices for U.S. pork
bellies and other pork cuts were sharply lower, with bellies
extending an already steep drop. Demand for pork bellies
generally is strong in the mid-summer when outdoor tomatoes
ripen and consumers eat bacon, lettuce and tomato sandwiches - a
dynamic known by some livestock traders as "BLT season."
    Pork bellies fell $10.26 to $115.73 per cwt on Tuesday while
the pork cutout comprised of other cuts including ribs, hams and
loins eased 49 cents to $74.05, according to the USDA.         
    "The break in the belly price caught a lot of people by
surprise," said independent livestock futures trader Dan
Norcini. "The bellies were the one bright spot in the cutout ...
that brought a lot of negative sentiment into the hogs."
    Cattle futures were mostly lower, easing on technical
selling as traders waited to see how cash cattle markets would
develop this week in the U.S. Plains. Weaker cash cattle trades
late on Friday weighed on prices during Monday's session.
    Rising prices for corn        also pressured cattle,
especially feeder cattle prices, as higher feed costs can limit
demand for cattle at feedlots.
    CME August feeder cattle        fell 2.175 cents to 149.325
cents per pound, lowest since July 11. More actively traded
August live cattle futures        were down 0.750 cent to
107.675 cents. 

 (Reporting by Michael Hirtzer)
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