U.S. lean hog futures touched their lowest prices in nearly two months on Tuesday on the heels of concerns over elevated trade tensions between the U.S. and China.
Traders are concerned that a resolution to the U.S.-China trade war may take longer than previously anticipated, after President Donald Trump tweeted on Sunday that he would raise tariffs on $200 billion worth of Chinese goods to 25% from 10%, Reuters reports.
U.S. pork producers continue to push for a trade resolution as China’s purchases of U.S. pork have slowed when tariffs were raised to 62% last year. China is looking to increase total pork imports to compensate for hogs killed in an outbreak of African swine fever (ASF).
China’s increased demand should generally underpin hog futures going forward, analysts told Reuters.
“African swine fever is expected to dramatically tighten global meat supplies, regardless of whether we have a trade deal or not,” said Arlan Suderman, chief commodities economist for INTL FCSTone.
June lean hogs ended down 0.500 cents at 89.250 cents per pound at the Chicago Mercantile Exchange (CME), after dropping by the 3-cent daily trading limit on Monday.
July lean hog futures closed down 0.550 cents at 92.125 cents, after falling by the daily limit on Monday.
CME will reinstate the 3-cent limit for trading on Wednesday after temporarily expanding it to 4.5 cents on Tuesday.