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Positive US hog futures as Trump calls off Mexico trade tariffs

US hog futures rose on Monday (10 June) as traders were relieved President Donald Trump had called off plans to impose tariffs on imports of Mexican goods

11 June 2019, at 4:39pm

Traders remained on edge about the risk for further disruptions to pork shipments because the United States exports more than 20 percent of the pork it produces. Mexico bought about $1.5 billion worth of American hams and other pork products in 2017, making it the sector's top export market by volume.

China and Mexico separately implemented tariffs on imports of American pork last year, slowing sales. China's tariffs remain in place, while Mexico lifted its tariffs after Washington removed duties on imports of Mexican steel last month.

Reuters reports that hog futures fell about 4 percent last week as traders worried that escalating trade tensions would push Mexico to slap new duties on US pork.

"This is a valid rebound," said Rich Nelson, chief strategist for Illinois-based broker Allendale.

CME July lean hogs climbed 2.850 cents to 86.200 cents per pound. August hogs jumped 2.225 cents to 84.850 cents per pound.

Trump had threatened 5 percent tariffs on Mexican goods to be imposed on Monday (10 June), unless Mexico restricted illegal immigration from Central America into the United States. On Friday, he called off the tariffs, after the United States and Mexico announced an agreement on immigration.

Trump also said Mexico had agreed to "immediately begin" buying "large quantities" of agricultural goods from US farmers.

Traders shrugged off those comments.

"There's so many questions," Nelson said. "I am not going to get too excited about it."

The National Pork Producers Council, a US industry group, said it was "not going to speculate" on whether Mexico would buy more American pork as a result of a deal with Trump.

"We are very pleased that the tariffs were not implemented on our largest volume market," the group said.