May 13, 2009
USDA lowers Q2 hog price outlook on AH1N1, smaller exports
The US Department of Agriculture lowered its projection for cash hog prices in the second quarter due to AH1N1 flu concerns and reduced pork exports.
In its monthly Supply/Demand report released early Tuesday (May 12), the USDA projected prices for hogs during the second quarter from US$44 to US$46 per hundredweight on a live basis, compared with US$49 to US$51 in last month's report.
The price reduction amounts to around US$13.25 to US$13.50 per head for hogs weighing 265 to 270 pounds.
Some countries imposed temporary bans on imports of pork and pork products along with live hogs from some US states and Mexico amid concerns the AH1N1 virus could be carried by these products or animals. Outbreaks of the flu, which was initially called swine flu, were mostly found in Mexico and the US early on, but cases have now been reported in several other countries.
The USDA, the Centres for Disease Control and Prevention, the World Health Organisation and the OIE have stated that pork is safe to eat. Despite these assurances, some people were cautious, especially early on, and turned to other protein options instead at least for a short time, analysts said.
Market analysts, meat wholesalers and brokers said sales of fresh pork products declined in some areas of the US immediately after the flu outbreaks were reported but were less affected elsewhere. Wholesale pork prices and cash hog markets tumbled initially but have been moving back up in recent days.
With some international markets still partially closed or experiencing slower sales due to ongoing concerns, reduced export sales are expected to weigh on domestic pork prices throughout most of the remainder of this quarter. That in turn is seen keeping hog prices from rallying to levels that otherwise had been expected in May and June.
Losses in income to the nation's hog producers, collectively, during the quarter, compared with projections last month, could amount to around US$350 million, based on USDA's production and price estimates.
USDA said the "trade disruptions and consumption declines are expected to be relatively short-lived," and the agency did not appreciably adjust its outlook for hog prices during the second half of the year.
