Livestock Futures Leap on Nafta Uncertainty

By Benjamin Parkin Features Dow Jones Newswires

Livestock futures leaped on Thursday as traders took stock of the Trump administration's shifting position on trade with its neighbors.

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Concern that the U.S. could leave the North American Free Trade Agreement if Mexico and Canada were unwilling to renegotiate the deal has roiled livestock trading this week. Prices rose Thursday after the White House said it did not plan on leaving the agreement soon, though some market participants continued to bet defensively.

Lean hog futures for June delivery rose 2.9% to 72.825 cents a pound at the Chicago Mercantile Exchange, while April live cattle futures rose 2.7% to $1.356 a pound.

That was the highest close for cattle futures since late March 2016, which have led gains in recent weeks as hogs slumped. Traders are betting that some eventual disruption to Nafta could restrict beef imports from Mexico and tighten supplies, said Mike Zuzolo, president of Global Commodity Analytics.

"Nafta termination is still on the table and the futures market is taking it very seriously," Mr. Zuzolo said.

Both markets are also benefiting from rising cash prices. Hog prices inched up to 55.38 cents a pound as of Thursday morning, extending a reversal that began recently after prices fell consecutively for over four weeks.

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"There's suspicion out there that maybe we're running into a little tighter supplies," Mr. Zuzolo said.

The cash trade for cattle strengthened Thursday on "very good demand," the U.S. Department of Agriculture said. Cattle sales in the southern plains ranged from $1.35 to $1.38 a pound, while live sales ranged from $1.38 to $1.40 in northern states.

That could give traders further room to raise futures prices toward cash levels as they try to close the spread between the two markets.

Write to Benjamin Parkin at benjamin.parkin@wsj.com

(END) Dow Jones Newswires

April 27, 2017 15:00 ET (19:00 GMT)