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China likely to boost pork imports; spurs rally in US hog futures

Chicago

CHINA, the world's biggest consumer of pork, appears poised to boost imports, lifting US hog futures from the doldrums.

Spot pig prices in China surged 12 per cent since March 8 to the highest in 23 months, and the shares of hog companies are trading at lofty multiples. Investors are betting on a supply squeeze after African swine fever spread to almost all of the Asian nation's provinces, forcing farmers to cull animals.

In January, the hog-breeding herd in China fell 15 per cent from a year earlier, the Hightower Report in Chicago said. If pork production falls by that percentage in the second half of the year, the country would have to import 1.54 billion pounds (698.5 million kg) a month to maintain supplies, the analyst said.

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"The turn higher in China's pork prices is a bullish force, and it may help pull pork prices from around the world higher, as China is likely to become an active importer," Hightower said.

On the Chicago Mercantile Exchange, hog futures for June settlement jumped 6.3 per cent in the past three sessions to 80.25 US cents a pound. On Tuesday, the price reached 80.425 cents, the contact's highest since Jan 11. On Feb 20, the price touched a six-month low, while April hogs slumped to a record.

Funds are unwinding bets on a decline, and speculators are anticipating supply concerns, according to Steiner Consulting Group in Manchester, New Hampshire. BLOOMBERG