May 1, 2008

 

Russian pork import ban cause sharp drop in US hog futures

 

 

US hog futures fell on Tuesday (April 29, 2008) nearly breaching the daily limit in the aftermath of Russia's ban on pork imports from four US pork plants.

 

Moscow claimed the pork contained the antibiotic tetracycline.

 

Two of the affected plants belonged to meat giant Tyson Foods Inc. and the other two were owned by Farmland Foods, a unit of Smithfield Foods.

 

The US Meat Export Federation, Tyson and Smithfield said they were investigating.

 

Analysts say it could be a big blow to the market given the high hog slaughter rates in the US market now.

 

June lean hogs 2LHM8 closed off 2.900 cents at 72.550 cents per lb after trading down the 3.000-cent limit at 72.450 earlier. July 2LHN8 was off 2.000 cents at 75.175.

 

Both months fell to one-week lows with June slipping under the 100-day moving average and July briefly under 200-day amid stop loss selling.

 

Russia is the fifth largest market for US pork, accounting for up to 9 percent of US pork exports in the first two months of the year.

 

Pork export figures from the USDA are delayed about two months and Vande Vorde noted that reports for March and April will still show very good exports of pork to Russia.

 

USDA said cash pork sales came to a near standstill early on Tuesday. Pork sales had already started to slow domestically after pork prices reached a nine-month high late last week.

 

USDA on Monday put the pork cutout value off 18 cents at US$73.23 per cwt. The previous pork cutout price was the highest since July 30, 2007.