US hog prices decline amid swine flu, billion-dollar losses for producers

Declining hog prices amid the swine-flu outbreak could spawn losses of more than a quarter of a billion dollars and be the last straw for some US pork producers.

 

Cash hog prices have fallen US$3 to US$5 per hundredweight this week, as nearby May lean-hog futures on the Chicago Mercantile Exchange have fallen about US$0.855 since Friday (Apr 24), a 12-percent drop, on fears that consumers will shun pork, even though the disease has not been found in pigs.

 

On Wednesday (Apr 29), May lean hogs settled at US$0.604 a pound, down US$0.285 or 4.5 percent.

 

Questions surrounding the disease and the word swine in the name have contributed to losses in lean hog futures, leading to lower cash prices and to declines in wholesale pork values.

 

US hog producers have lost money in 16 of the past 18 months, and they needed prices to be profitable during the spring and summer.

 

However, cases of swine flu have led to import bans by some countries on pork produced in a number of US states and Mexico.

 

Swine flu has been confirmed in seven deaths in Mexico, and is suspected of killing more than 150 people there, while US reported its first death from swine flu on Wednesday (Apr 29), and 91 cases have been confirmed in 10 states.

 

The type A H1N1 virus contains genetic information from three different influenza forms - swine, bird and human - is transmitted from human to human.

 

According to the U.S. Department of Agriculture (USDA), pork remains safe to eat, and the virus has not been found in US hogs.

 

The developments come at a time when prices normally are on the rise due to declining supplies and stronger demand.

 

Analysts and livestock buyers said for some of the nation's hog producers, the market disruption and price damage could be too much to overcome.

 

Purdue University agricultural economist Chris Hurt estimated that from 25 percent to 33 percent of the nation's hog producers may be forced to reconsider their positions in the industry, adding that the effects of such events on the market can linger for several weeks or longer.