Market News

Hog futures surge on lower China tariff

Chicago Mercantile Exchange live cattle futures were modestly higher ahead of this week’s direct cash business. Also, China has lowered tariffs on several U.S. ag goods, including beef, with the reduction scheduled to go into effect on the 14th. February was $.37 higher at $121.12 and April was up $.57 at $119.75.

Feeder cattle were modestly to sharply higher on the same factors as the live pit, with a little additional support from the lower move in corn. March was $.22 higher at $135.90 and April was up $.32 at $137.57.

Direct cash cattle markets were generally quiet, aside from a few sales in Nebraska at $193 dressed. Aside that activity and some very light business in Iowa this week, trade has been at a standstill in the major feeding areas. Asking prices were $123 on the live basis and $196 to $198 dressed with bids at $120 live and $192 to $193 dressed. Widespread business will wait until Friday and buyers and sellers will continue to watch the futures and wholesale markets. The USDA says beef export sales last week were 18,700 tons, mainly to Japan and South Korea. China’s new tariff on U.S. beef is 25%, down from 30%.

Boxed beef closed mixed on light to moderate demand for moderate offerings. Choice was up $.21 at $210.93 and Select was down $1.98 at $205.96. The estimated cattle slaughter of 121,000 head was down 2,000 on the week but up 2,000 on the year.

At the Clarinda Livestock feeder cattle sale in Iowa, compared to the previous week, steers weighing less than 500 pounds had sharply higher undertone, while 500 to 750-pound steers were $3 to $5 higher and steers weighing more than 750 pounds were $2 to $3 higher. Heifers weighing less than 500 pounds had a sharply higher undertone, 500 to 650-pound heifers were $4 to $6 higher, and heifers weighing more than 650 pounds were $1 to $3 higher. The USDA says the highlight was a string of red replacement heifers averaging 745 pounds at $148. 56% of the offering were steers and 72% of the run weighed more than 600 pounds. Medium and Large 1 feeder steers weighing 600 to 700 pounds brought $149.75 to $170 and 700 to 800-pound steers were reported at $139 to $153.75. Medium and Large 1 feeder heifers weighing 500 to 600 pounds ranged from $137 to $154 and 600 to 700-pound heifers sold at $131 to $144.

Lean hog futures were higher, mostly limit up, on the cash and wholesale support during the session, along with Beijing’s announcement it will reduce its’ tariff on U.S. pork. February was $.60 higher at $57.70 and April was up $3.00 at $64.87.

Cash hogs were mostly steady to higher, with relatively light closing negotiated numbers for the major direct markets. Market ready numbers remain ample, there’s plenty of pork available, and the recent trend in wholesale business is a concern. Even the pork carcass cutout value was up at midday Thursday and closed firm, it has lost a lot of ground recently and swings in some of the primal cuts have been wide. Beijing has lowered its’ tariff on U.S. pork from 60% to 55%, also effective February 14th. China bought 5,100 tons of U.S. pork last week and another 16,200 tons were shipped out. Weekly sales were solid at 29,500 tons, with Mexico purchasing 11,500 tons.

Pork closed $.05 higher at $65.35. Picnics and ribs were firm, with bellies up $5.94. Loins, butts, and hams were lower. The estimated hog slaughter of 493,000 head was up 2,000 on the week and 59,000 on the year.

National direct barrows and gilts closed $.28 higher at $44 to $52 with a weighted average of $50.29, while the Western Corn Belt was up $1.61 at $50.41 and the Eastern Corn Belt had no recent comparison with an average of $50.17. Iowa/Southern Minnesota was not reported due to confidentiality. Butcher hogs at the Midwest cash markets were steady at $40. Illinois direct sows were steady at $13 to $22 on moderate to good demand for heavy offerings. Barrows and gilts were $1 to $2 lower with moderate demand and offerings. Boars ranged from $5 to $20.