US hog futures plunge as meat demand decline

Hog futures dropped to a three-month low and pork bellies plunged to the lowest since 2002 on speculation that demand for US pork has yet to recover from a global AH1N1 flu outbreak in late April.

 

Hog prices in Chicago have tumbled 19 percent since April 23, when the virus began making headlines. Countries including Russia, the fourth-largest importer of US pork, and China have banned some shipments since the outbreak.

 

Ahead of the USDA report, Allendale Inc. broker Rich Nelson said that pork exports is seen to decline in April, noting the bans from Russia and China as the main reasons.

 

Hog futures for July settlement fell 0.4 cent, or 0.7 percent, to 58.35 cents a pound on the Chicago Mercantile Exchange. Earlier, the price touched 57.8 cents, the lowest for a most-active contract since February 25.

 

Pork-belly futures for July delivery plunged by their 3- cent trading limit on the CME for the second straight day. The price declined 5.1 percent to 55.9 cents a pound, the lowest for a most-active contract since August 2002. Since May 28, pork bellies have fallen for nine straight sessions and dropped 23 percent.

 

Nelson said the slide in hog prices may encourage livestock producers to shrink their herds as many farmers have been losing money on every animal they sell for more than a year.

 

 

Wholesale pork prices climbed 0.9 percent to 56.63 cents a pound yesterday, USDA data show. The price is down 26 percent in the past year.

 

According to the USDA, China, excluding Hong Kong, was the sixth-largest importer of US pork last year.