U.S. lean hog futures sagged on Thursday as the confirmation of record-large weekly pork export sales to China failed to impress traders who have been expecting a surge in demand for months.
Uncertainty about when the pork will be shipped to China also kept a lid on gains, traders said.
The U.S. Department of Agriculture reported U.S. pork sales to China for shipment this year were 18,810 tonnes during the period from Sept. 27 to Oct. 3 and 123,362 tonnes for shipment in 2020.
“We don’t know the terms,” said Bob Brown, an independent U.S. livestock market analyst. “It says 2020. It could be spread out over the whole year.”
U.S. pork sales have largely fallen short of expectations so far this year, following forecasts for massive Chinese imports due to an outbreak of a fatal pig disease.
Chinese domestic prices are soaring as the African swine fever virus has decimated the country’s hog herd, tightening supplies of China’s favorite meat.
But Beijing has imposed hefty 72% tariffs on imports of American pork in retaliation for U.S. duties on Chinese goods, slowing U.S. sales.
Still, U.S. prices look attractive compared to those for pork from the EU, a main supplier to China, Brown said.
Some traders were expecting the USDA to report there were even bigger sales ahead of U.S.-China trade talks this week, said Mike Sands, president of MBS Research.
“To the extent that those numbers were floating around ahead of time, it might have built in an expectation that this week’s weekly trade data would show us a higher number,” he said.
CME December lean hog futures settled down 1 cent at 68.475 cents per pound.
CME cattle futures closed mixed.
The USDA reported net export sales reductions of U.S. beef for 2019, a marketing-year low. Traders were separately keeping an eye on wintry weather that could hit feedlots in the central United States.
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