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CME update: hog futures sink amid tightening import restrictions from China

US lean hog futures dropped on 22 June as China increased oversight of imported goods due to a recent COVID-19 outbreak.

23 June 2020, at 8:55am

Reuters reports that lean hog futures retreated yesterday, with actively traded nearby contracts sinking by more than 3 percent to hit life-of-contract lows. Traders attributed the plummets to worries over pork exports to China.

On Sunday 21 June, China’s customs authority suspended poultry imports from a Tyson plant in Arkansas due to a new cluster of COVID-19 cases at the facility. That move followed a stoppage of pork imports from a German processor last week.

The customs authority has asked suppliers of imported goods to sign a declaration stating that their produce is not contaminated with the novel coronavirus.

Despite multiple pork plants temporarily closing during the pandemic, exports to China have continued.

"Not importing from Tyson right now is definitely why we had some pressure in the hogs today," said Ted Seifried, chief ag market strategist at Zaner Ag Hedge.

Chicago Mercantile Exchange (CME) July lean hogs fell 1.625 cents to 46.825 cents per pound, while actively traded August fell 1.700 cents to 51.100 cents per pound. Both contracts posted fresh contract lows during the session.

After the close, the USDA reported a record-large drop in US frozen pork inventories last month, which analysts said was due to coronavirus-related pork plant closures and soaring pork prices.

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