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LIVESTOCK-CME lean hogs rally on technical buying, China trade hopes

Karl Plume

CHICAGO, May 1 (Reuters) - U.S. lean hog futures rallied sharply on Wednesday with several contracts closing up the daily trading limit on technical buying and speculation that Chinese demand for U.S. pork is poised to grow.

The U.S. Department of Agriculture (USDA) is due to release weekly export sales data early on Thursday and traders will be closely watching the report for confirmation of new shipments or sales to China.

Chicago Mercantile Exchange (CME) June lean hogs settled at 91.225 cents per pound and July futures ended at 95.375 cents, both up the daily 3-cent limit. August and October futures also closed limit-up.

The market's daily limit will expand to 4.5 cents for Thursday's session, the CME said.

Hog futures had plunged more than 10 percent over the past two weeks as commodity funds, which had built up a massive long position in livestock futures, started shedding longs. As a result, lean hogs were poised for a technical rebound.

"The hogs got too cheap. They were oversold," said Alan Brugler, president of Brugler Marketing and Management.

Hog futures also remained supported by expectations for accelerated Chinese purchases of U.S. pork after its domestic hog herd was hit hard by African swine fever.

Although China has not made large purchases in recent weeks, past sales confirmations in the USDA's weekly sales report have triggered steep futures rallies.

U.S. and Chinese officials held "productive" trade talks in Beijing on Wednesday and will continue discussions in Washington next week, U.S. Treasury Secretary Steven Mnuchin said.

Many traders expect goodwill purchases of U.S. goods, including pork, to be part of any trade deal.

"We know China needs a lot of meat imports and a trade deal would allow it to be U.S. pork," Brugler said.

Live cattle futures continued a recent slide as actively traded June futures dropped for an eighth straight session on fund liquidation and technical selling.

Weaker cash cattle markets added pressure.

Trading in southern Plains feedlot markets has yet to develop this week, but cattle on the weekly online Fed Cattle Exchange marketplace traded at $122.15 per cwt on average, down from light sales at $127.00 last week.

CME June live cattle futures settled down 0.375 cent at 113.875 cents per pound, its lowest since Dec. 7. August cattle ended down 0.800 cent at 110.975 cents per pound.

August feeder cattle were up 0.075 cent at 149.225 cents and September was down 0.250 at 150.300 cents. (Reporting by Karl Plume Editing by Tom Brown)