Flu hits pork prices
Tuesday, April 28, 2009
© AgMedia Inc.
by BETTER FARMING STAFF
The Chicago Mercantile Exchange is feeling the effects of an outbreak of a new strain of swine flu in Mexico and the United States.
By 8:22 a.m. this morning, the lean hog futures price for June had dropped to 68.025 cents per pound from an opening price of 68.150 cents per pound. The drop is continuing the slide that began yesterday when the June futures price slid a full three cents through the day, closing at 68.65 cents.
Yesterday, the price of May pork bellies futures also dropped three cents to 78.5 cents a pound. By 8:05 a.m. this morning, the July pork bellies futures price was also experiencing a hit, dropping to 80.700 cents per pound from an opening price of 80.825 cents a pound.
Meanwhile, on Sunday, Smithfield Foods Inc. issued a news release stating it has found no evidence of the new swine flu in its herd or employees at its joint ventures in Mexico.
And Bloomberg news services reports the flu is affecting grain prices because of speculation that the outbreak will affect the demand for livestock feed and pork.
This morning, U.S. Secretary of Agriculture Tom Vilsack also issued a statement that there is no evidence the United States’ swine herd has been infected with the new strain and the country’s pork products are safe for consumption.
“Swine flu viruses are not transmitted by food so a person cannot get swine flu from eating pork or pork products,” Vilsack adds.
Russia and Indonesia have joined China and the Philippines in banning pork products from Mexico and parts of the United States.
More updates will follow throughout the day. BF
Update:
“Hopefully the worst is over,” says Kevin Grier, senior market analyst with the Guelph-based George Morris Centre, as he refers to the plunge in hog futures yesterday.
He attributes the plunge to the uncertainty to do with export and domestic demand and notes that futures today appear mixed with those nearer in time showing modestly lower prices and months farther away mixed prices.
He doesn’t agree that the crisis may be affecting grain prices: “There are still mouths to feed; the only way it could impact grain prices is if the markets were expecting some sort of liquidation.”
As for the impact of some countries’ bans on Mexican and U.S. pork imports, he says it’s too early to tell what the impact might be for Canadian producers. Canadian prices are linked to U.S. prices and may become depressed with a reduction in demand. Or Canadian producers might be able to pick more export business at the expense of U.S. producers. “I don’t know. It’s very early on that one,” he says.
“Overall, there’s nothing good about this at all, from any perspective.”
While it’s happening at a time when the industry was expecting a rally in prices, Grier says the flip side is if it had happened when prices were lower, it would make it even worse. “There’s no good time for this.” BF