LIVESTOCK-CME hog futures tumble on tariff woes, but cattle ends higher

By Julie Ingwersen

CHICAGO, March 4 (Reuters) - Chicago Mercantile Exchange lean hog futures fell to 5-1/2 month lows on Tuesday, joining broader market declines tied to fears that President Donald Trump's trade policies will curb demand for U.S. goods, traders said.

Trump set 25% tariffs on most imports from Mexico and Canada and doubled duties on Chinese goods to 20% on Tuesday.

Beijing swiftly retaliated, announcing hikes to import levies covering $21 billion worth of American agricultural and food products including pork. Mexico's government is expected to respond on Sunday.

Mexico was the top market for U.S. pork in 2024 while China was the No. 3 customer after Japan.

The benchmark CME April hog contract LHJ25 settled down 1.350 cents, or 1.6%, at 82.350 cents per pound after dipping to its lowest level since mid-September at 80.725 cents. June hog futures LHM25 ended down 2.200 cents at 93.150 cents.

Fund-driven selling accelerated the sell-off, traders said. Commodity funds hold a net long position in CME lean hog futures, leaving the market prone to long liquidation.

"We are seeing huge liquidation by hedge fund longs, but commercials are lifting hedges and buying in," said Dan Norcini, an independent trader.

Despite the tariffs, Mexico is likely to continue buying U.S. pork, Norcini said, because importing meat from more distant suppliers may prove too expensive.

CME live cattle futures rallied from early declines and closed higher, supported by resilient beef prices and bargain-buying after a month-long slide.

The benchmark April contract LCJ25 hit a two-month low at 189.500 cents, near its 200-day moving average, but bounced and settled up 2.400 cents at 194.650 cents per pound.

April feeder cattle futures FCJ25 ended up 0.450 cent at 272.500 cents per pound.

Worries about slowing consumer demand for beef had pressured the cattle market since futures set lifetime highs in late January, buoyed by tight U.S. cattle supplies.

However, wholesale beef prices have held relatively steady over the last week. The U.S. Department of Agriculture priced choice cuts of boxed beef at $314.87 per hundredweight (cwt) on Tuesday afternoon, up 94 cents from Monday.

"The fact that the boxed beef is not falling apart is making some traders question whether the demand for beef is going to plunge," Norcini said.