By Julie Ingwersen
CHICAGO, Jan 17 (Reuters) – Front-month lean hog futures on the Chicago Mercantile Exchange (CME) settled about 1% higher on Friday, supported by fears that a weekend winter storm in the Plains and Midwest would slow the transport of livestock and complicate pork and beef plant operations, traders said.
“We see some significant disruptions on the pork side (and) we see disruptions on the beef side, with plants having trouble getting loads out the door,” said Altin Kalo, agricultural economist for New Hampshire-based Steiner Consulting.
CME February lean hog futures settled up 0.800 cent at 67.675 cents per pound. The April contract ended up 0.325 cent at 74.100 cents a pound.
“Areas of moderate to heavy snow are forecast over much of the Upper Midwest, Great Lakes, and the interior Northeast and northern New England. Freezing rain is expected from the southern Plains into the Mid Mississippi Valley, and the Mid Atlantic region,” the National Weather Service said.
The weather service posted blizzard warnings on Friday afternoon from eastern North Dakota through northwest Iowa.
The U.S. Department of Agriculture projected Saturday’s cattle slaughter at 27,000 head and the hog slaughter at 120,000 head, down from the estimated week-ago kill of 32,000 cattle and 218,000 hogs.
CME live cattle futures also drew support from weather worries, although the most-active nearby contracts stayed inside of Thursday’s trading range.
CME February live cattle settled up 0.225 cent at 126.350 cents per pound and April cattle ended up 0.825 cents at 127.250 cents.
CME March feeder cattle futures ended up 0.175 cent at 145.000 cents per pound, with a jump in Chicago Board of Trade corn futures hanging over the market, capping rallies.
Traders continued to mull the implications of the U.S.-China trade deal signed at midweek in Washington.
China agreed to increase purchases of U.S. agriculture products by $32 billion over two years, the deal said. But China’s pledge to buy based on “market conditions” added to doubts about the size and timing of any future purchases, pressuring grain and livestock futures markets on Thursday.
Nonetheless, some analysts see the pact as a potential boon for U.S. beef exports. China agreed in the deal to eliminate a cattle age requirement for imports of U.S. beef, among other steps.
“People are still digesting what the agreement means,” Kalo said. “In the second half of year, we are thinking there is more upside risk for beef because of the agreement.”
(Reporting by Julie Ingwersen Editing by Leslie Adler)