CHICAGO, June 1 (Reuters) - Chicago Mercantile Exchange (CME) lean hog futures fell Monday on worries that deteriorating relations between the United States and China, the world’s biggest pork importer, could inhibit U.S. pork sales to the Asian nation, traders said.
China told state-owned firms to halt purchases of soybeans and pork from the United States, two people familiar with the matter said, after Washington said it would eliminate special treatment for Hong Kong following China’s move to tighten security measures in the territory.
Such a halt would put China further behind in making good on its pledges under the “Phase 1” U.S.-China trade pact signed in January.
“China has already been backing off from pork purchases over the past three weeks,” said Rich Nelson, chief strategist for Allendale Inc.
Weekly U.S. pork sales to China averaged more than 23,000 tonnes from early March through April, but net sales through the first three weeks of May were a net negative 417 tonnes, according to U.S. Department of Agriculture data.
CME June lean hogs ended down 2.250 cents at 54.600 cents per lb on Monday, while most-active July futures settled down 1.875 cents at 55.150 cents per lb.
Wholesale pork prices fell. The USDA reported the U.S. pork cutout, an indicator of wholesale prices, down $4.87 at $83.33 per cwt at midday. The USDA’s afternoon update stretched the decline to $7.16, at $81.04 per cwt.
The U.S. daily slaughter pace has been improving since April, when coronavirus outbreaks among workers forced numerous pork and beef packing plants to close. But a backlog of market-ready hogs persists, a factor that hangs over the futures market. A full recovery “could be a ways off,” Nelson said.
CME live cattle futures closed lower, despite cattle trading in the cash market at a significant premium to nearby futures.
Market-ready cattle traded on Monday at about $118 per hundredweight in the southern Plains, the USDA confirmed, a price the government termed “unevenly steady” with the bulk of last week’s trade, while CME June live cattle settled on Monday at 98.300 cents per pound, down 1.425 cents for the day. Most-active August live cattle futures ended down 0.625 cent at 98.975 cents per lb.
CME feeder cattle futures bucked the weak trend, with benchmark August finishing 0.775 cent higher at 136.125 cents per lb.
Reporting by Julie Ingwersen; editing by Richard Pullin
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