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US hog market rally slows down

(CME) livestock futures had a mixed day of trading on Thursday (25 July) as a dearth of cash trade fuelled more selling of nearby live cattle contracts and buying of the deferred months, traders said.

28 July 2019, at 9:00am

The recent rally on hog futures continued to cool, as the market corrected after a lack of new export sales news from the US Department of Agriculture.

Hog futures have surged in recent weeks due largely to the livestock market's expectations for increased demand for US pork from China, the world's top importer, traders said.

"The export numbers from USDA were good - with over 9,000 tonnes - but there weren't any new sales that were booked," said Dan Norcini, an independent livestock trader. "At this point, people are becoming really sceptical and wondering when China is going to start buying."

Norcini said hog futures prices could slip further if there continues to be a lack of new sales from China in the coming weeks.

Late Thursday, Bloomberg reported that China will allow some tariff-free purchases of US cotton and corn.

But some traders were wary of banking on such news.

"It's a show-me attitude now, not a tell-me attitude," Norcini said. "This market is counting on China to come in and gobble the big volume of pork we're going to have toward the end of the year. Because if they don't, who will?"

CME August lean hog futures closed the day down 0.600 cent at 85.950 cents per pound, while October hogs settled down 2.200 cents at 78.650 cents.