Chicago-based Mercantile Exchange (CME) American futures for pigs fell by about 1.5% on Thursday, joining a wide sale of agricultural futures. Traders associate it with the sale of funds and the uncertainty regarding the details of the signed trade agreement between the US and China.
China agreed to increase purchases of US agricultural products by $ 2 billion over 2 years, including $ 12.5 billion above the corresponding base level of 2017 by $ 24 billion in 2020 and $ 19.5 billion above the baseline in 2021 . This country needs to import pork, as its world's largest herd was destroyed by African plague, a deadly animal disease.
But US pork is still faced with retaliatory tariffs in China. In addition, the country's promise in a trade agreement to buy US agricultural products based on “market conditions” has heightened doubts about the size and timing of any future purchases.
Direct Speech: “We all have some impressive predictions, but the lack of clear volumes of by-products in the trade deals document is worrisome,” said Rich Nelson, chief strategist at Allendale Inc.
When you buy Chinese stocks, you are essentially financing the Chinese government. 8 out of 10 major Shanghai indexes belong to the state.
February CME lean pig futures fell 1 cent and fell to 66.875 cents per pound. The April contract lost 1.2 cents and fell to 73.775 cents per pound.
The US Department of Agriculture reported export sales of pork to the United States for the week ending January 9 at 38,700 tons. New sales to China totaled 1,900 tons, and weekly shipments totaled 16,030 tons, for a maximum of 4 weeks. Nevertheless, abundant stocks of American pork and aggressive rates of slaughter of pigs are still hanging in the futures market.
Direct speech: “We have serious overproduction, and we still have a 60% (Chinese) rate for pork. Our exports are starting to accelerate, but the bottom line is that pork consumption per capita remains unchanged, ”said Dennis Smith, commodity broker at Archer Financial Services.
According to traders, livestock futures fell amid the fact that most contracts probably closed well above daily lows.
- Earlier, we reported that Chinese banks lured customers with pork.
- We also wrote that the Canadian pork sector is interested in resolving export issues with China.
- Continued trade tensions between the US and China lowered lean pork futures.
