LIVESTOCK-US hog futures drop amid China pork testing move

Tue Feb 19, 2013 6:29pm EST
 
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* China seeks added assurance US pork ractopamine free
    * Hog futures further weighed by lower cash hog prices
    * Live cattle weaken amid cash caution, futures' premiums
    * Lower live cattle pulls down feeder cattle contracts

    By Theopolis Waters
    CHICAGO, Feb 19 (Reuters) - Chicago Mercantile Exchange hog
futures closed down sharply on Tuesday as lower cash hog prices
and requests by China for extra testing of U.S. pork for a feed
additive weighed, said analysts and traders.
    China wants a third party to verify starting March 1 that
U.S. pork shipped to the country is free of the feed additive
ractopamine used to promote lean muscle growth and banned in the
European Union, Russia, Taiwan and mainland China.
 
    "China is a huge market for U.S. pork and if we lose them it
could really put a big dent in our overall exports," a hog
futures trader said. 
    Futures sellers outnumbered buyers as packers lowered cash
hog bids in an effort to realign their margins and stimulate
wholesale pork demand.
     The U.S. Department of Agriculture showed the average price
for hogs in the most-watched Iowa/Minnesota market Tuesday at
$79.15 per cwt, down $1.73 from Friday.
    HedgersEdge.com put the average pork packer margin for
Tuesday at a negative $10 per head, compared with a negative
$12.55 on Feb. 12.
    April hogs ended at 83.050 cents per lb, down 1.200
cent and June closed 0.975 cent lower at 91.975 cents. 

    LIVE CATTLE SLIDE ON PREMIUMS 
    Live cattle futures settled lower amid futures' premium to
recent cash cattle prices, traders and analysts said. They also
cited caution about cash prices for this week.
    CME spot February live cattle closed at 126.400
cents per lb, down 0.100 cent. April ended 0.900 cent
lower at 129.550 cents.
    "April futures trading at roughly 129.50 cents looks awfully
pricy when cash moved at $123 last week," said Oak Investment
Group president Joe Ocrant.
    There were no reports of cash cattle bids or asking prices
by feedlots. 
    Investors are watching the wholesale beef sector for clues
that the seasonal lull in demand may be about to end. Grocers
and other buyers are expected to stock on product to feature in
early March.
    USDA put the wholesale price for choice beef on Tuesday at
$182.47 per cwt, up 52 cents from Friday; select cuts gained 48
cents to $180.88.
    Traders are also tracking wintry weather in the central and
western U.S. Plains that could slow the movement of livestock to
market, thereby supporting cash prices.
    Feeder cattle futures ended lower with live cattle market
losses.
    March feeders closed down 0.200 cent per lb to
143.175 cents. April closed at 146.175 cents, 0.450 cent
lower.