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US hog market hopeful for renewed export to China

CME lean hog futures soared by the daily limit and approached a one-month high on Wednesday (17 July) on renewed hopes that China will increase pork imports to compensate for damage caused by ASF.

18 July 2019, at 10:15am

China's agriculture ministry has confirmed a new outbreak of African swine fever in Sichuan province in the southwest of the country.

The world's biggest pork consumer has reported more than 140 outbreaks of the disease, for which there is no vaccine or cure, since the first case last August.

China's imports of US pork have so far fallen short of American farmers' expectations. However, a recent increase in Chinese pork prices is raising expectations that China may now start a major buying programme, said Don Roose, president of Iowa-based broker US Commodities.

"Demand pressures are starting to hit China," Roose said. "The logical conclusion that the trade wants to believe is that this is the start of Chinese interest in the US."

CME August lean hog futures closed up 2.950 cents at 82.000 cents per pound, after climbing by the daily, exchange-imposed 3-cent limit. October hogs jumped 2.525 cents to finish at 77.825 cents and traded at its highest price since 20 June.

Major pork imports by China would help reduce US meat inventories that swelled as farmers increased herd sizes and meat packers slaughtered more animals.

Packers on Wednesday slaughtered 463,000 hogs, up from 460,000 a year ago, and 122,000 cattle, up from 118,000 a year earlier, according to US Department of Agriculture data.

"We'd been supply bearish, but have turned more demand bullish with China markets trying to move up," Roose said about pork. "The buying could be so significant."

African swine fever has also spread in other Asian countries, including Vietnam and Laos, and parts of Europe.

Bulgaria stepped up measures to contain the disease, while the Philippines suspended meat imports from Germany after it was found to contain pork bones from Poland, which has had recent ASF outbreaks.