Trade concerns are starting to make all other factors in the hog market look obsolete.<\/p>\n
Futures have tumbled to the lowest since March. That\u2019s as African swine fever decimates China\u2019s pig herd in an unprecedented global supply disruption. Even though the Asian nation is importing huge amounts of meat, American producers are losing out to rivals in Brazil and elsewhere because of Donald Trump\u2019s trade war. What\u2019s more, the U.S. president\u2019s threat of additional tariffs is sparking concerns that a deal to end the spat is even further away.<\/p>\n
China just made its biggest-ever cancellation of American pork, scrapping a purchase of 14,700 metric tons, data showed on Thursday. The Chinese government has asked its state-owned enterprises to suspend purchases of U.S. agricultural products, people familiar with the situation said.<\/p>\n
U.S. farmers had built up their hog herds in anticipation of more exports to meet the Chinese supply gap, but if trade tensions continue to run high, they could instead be facing a massive domestic glut.<\/p>\n
\u201cChina is just fighting back \u2014 they canceled all that business, and that just has the market reeling,\u201d said Dennis Smith, senior account executive at Archer Financial Services Inc. in Chicago. \u201cWe\u2019ve got way too much pork if we can\u2019t get a big export program going.\u201d<\/p>\n
Hogs in Chicago tumbled 17 percent in the week ended Friday, the biggest loss for rolling most-active futures since last July. Meanwhile, a measure of historical 30-day volatility is surging.<\/p>\n
\u201cThis market is truly the Wild West,\u201d analysts at CommStock Investments said in a report.<\/p>\n
American pork producers are losing $1 billion annually because of the trade war, David Herring, president of the National Pork Producers Council, told a House Agriculture subcommittee in July. The dispute with China is costing producers $8 per animal a year, he said.<\/p>\n
Investors are fleeing. Open interest is near a four-month low reached in July. The measure of contracts outstanding had surged in May to the highest since 2013 as China\u2019s swine-fever woes built up expectations of bigger American exports. About a quarter of U.S. pork production is typically destined for shipment, making the market particularly sensitive to trade disruptions.<\/p>\n
Some funds seem to have used recent price declines to lock in returns from bearish wagers. In the week ended July 30, money managers held a hog net-long position of 39,964 futures and options, up 19 percent from a week earlier, U.S. Commodity Futures Trading Commission data showed Friday. The figure, which measures the difference between bets on a price increase and wagers on a decline, mainly reflected a 12 percent drop for short-only bets.<\/p>\n
The aggregate number of short and long positions slid 1.8 percent, the biggest drop in eight weeks.<\/p>\n
\u201cEveryone is reacting day by day,\u201d moving along with Trump\u2019s Twitter feed, Smith said. \u201cNobody is trading it.\u201d<\/p>\n
Trade concerns are starting to make all other factors in the hog market look obsolete. Futures have tumbled to the lowest since March. That\u2019s as African swine fever decimates China\u2019s pig herd in an unprecedented global supply disruption. Even though the Asian nation is importing huge amounts of meat, American producers are losing out to…<\/p>\n","protected":false},"author":1,"featured_media":19195,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_kad_post_transparent":"","_kad_post_title":"","_kad_post_layout":"","_kad_post_sidebar_id":"","_kad_post_content_style":"","_kad_post_vertical_padding":"","_kad_post_feature":"","_kad_post_feature_position":"","_kad_post_header":false,"_kad_post_footer":false,"footnotes":""},"categories":[1],"tags":[],"acf":[],"_links":{"self":[{"href":"https:\/\/chestercountyindependent.com\/wp-json\/wp\/v2\/posts\/11631"}],"collection":[{"href":"https:\/\/chestercountyindependent.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/chestercountyindependent.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/chestercountyindependent.com\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/chestercountyindependent.com\/wp-json\/wp\/v2\/comments?post=11631"}],"version-history":[{"count":0,"href":"https:\/\/chestercountyindependent.com\/wp-json\/wp\/v2\/posts\/11631\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/chestercountyindependent.com\/wp-json\/wp\/v2\/media\/19195"}],"wp:attachment":[{"href":"https:\/\/chestercountyindependent.com\/wp-json\/wp\/v2\/media?parent=11631"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/chestercountyindependent.com\/wp-json\/wp\/v2\/categories?post=11631"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/chestercountyindependent.com\/wp-json\/wp\/v2\/tags?post=11631"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}