News that the US and Mexico reached a preliminary agreement that would update NAFTA gave US agricultural markets a boost, especially hog futures. The bilateral trade deal would potentially eliminate a 20-percent tariff on Mexican products and reopen agricultural exports to Mexico. Mexico is the largest importer of US pork so this news is especially impactful for hog farmers. October lean hog futures jumped up 5.8 percent to 54.775 cents a pound at the Chicago Mercantile Exchange, soaring to their daily limit.
Hog futures were further boosted by an outbreak of African swine fever in China, which has the largest hog herd in the world. The prospects for hog farmers in the US are looking up and the markets are reflecting this.
Despite the progress between the US and Mexico, Canada has not agreed to new terms for NAFTA and this will likely restrain agricultural prices. Gro Intelligence subscribers can easily monitor the agricultural commodities markets to keep up with the trade deal’s implications.
Hog futures have rebounded from May lows as the US and Mexico agreed in principle to resolve trade differences. At left, open positions for hog futures at the Chicago Mercantile Exchange reflect the bullish market. The chart at right shows that Mexico receives the largest share of US pork exports