May 21, 2009

USDA lowered its price forecast for second-quarter live equivalent 51-52 percent lean hogs to US$44-US$46 per cwt from US$49-US$51 per cwt last month.

The lower forecast reflects generally weaker demand due to the negative price effects that resulted from international AH1N1 flu outbreaks in late April and early May.

Consumer and foreign government reactions to the flu likely resulted in temporarily lower domestic and foreign demand for pork products.

Weak domestic demand likely reflected caution on the part of wholesale purchasers as they gauged consumer reaction to the flu.

Export demand was likely affected by both foreign government actions to restrict imports and by the impact of disease concerns on the buying habits of foreign consumers.

Prices of US pork and hogs are expected to adjust upward as demand normalises and seasonal product flows are restored.

June hog prices are expected to be seasonally higher, reflecting lower supplies of slaughter-ready animals.