Cattle futures bounced Friday after the Trump administration said it reached an agreement with Beijing to reopen the Chinese beef market to U.S. meat by this summer.
American ranchers and packers have long pushed for a deal that would resume U.S. beef exports to China, largely halted since 2003. China is the fastest-growing beef market in the world.
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"This is tremendous news for the American beef industry," said Agriculture Secretary Sonny Perdue. "We will once again have access to the enormous Chinese market."
Live cattle futures jumped on the announcement, opening near their daily upper limit on Friday before easing. Live cattle futures for June delivery closed 1% higher at $1.25175 a pound at the Chicago Mercantile Exchange.
That helped to interrupt a recent slump in the market, but analysts sounded a cautionary note. Similar commitments by China in the past haven't amounted to much, they said.
"Until traders see exactly how volume of beef begins to trade into China," said Troy Vetterkind of Vetterkind Cattle Brokerage in Wisconsin, "futures might struggle to rally."
Persistent speculation about a deal may also mean the news is already priced into the market. That would make futures vulnerable to a "buy the rumor/sell the fact"-style sell-off, Mr. Vetterkind said.
Underlying signs of domestic beef supply-and-demand are favorable to optimists, however. Wholesale beef prices continue to rise to multiyear highs, hitting $2.47 a pound on Friday morning. Cattle weights, meanwhile, are falling as feedyards sell animals early while prices are good.
Hog futures, which have been tied to cattle futures recently, also rose. CME June lean hog futures closed 1.2% higher at 77.95 cents a pound.
The hog-and-pork trade has benefited from underlying signs of demand. Cash hog prices, pork values and packer margins all rose on Thursday.
The USDA projects Saturday's hog slaughter at 89,000, below last week. Analysts say that is a sign of an ongoing supply pinch that could help support futures into next week.
Write to Benjamin Parkin at email@example.com
(END) Dow Jones Newswires
May 12, 2017 15:15 ET (19:15 GMT)