June 29, 2010

Russia poultry setback affects Chicago hog prices

Doubts were raised over Russia's relaxation of a ban on imports of US poultry, cutting hopes of a clearing out rising stores of meat, and depressing prices of Chicago hogs.

Gennady Onishchenko, the head of Russia's consumer protection watchdog, said that supplies of US poultry to what was its biggest export market last year may restart in 1.5-2 months, in the best case.

The comments disappointed investors after a deal between US president Barack Obama and his Russian counterpart, Dmitry Medvedev, last week had appeared to clear the way to a speedy resolution of the trade curbs, which Russia introduced earlier this year.

Russia, which is attempting to build up its domestic chicken and hog businesses, said that a chlorine-based cleaning rinse used by US producers broke its food safety rules.

Delayed sales of chicken to Russia would leave more in the US to compete with supplies of beef and pork. Earlier this month, official data showed the level of chicken products in US cold stores at 132.16 million pounds, 89% higher than a year before.

Pork bellies for July slid by 1.6% to 101.00 cents a pound in Chicago, with lean hogs down 1.4% at 79.575 cents a pound.

The losses defied what had appeared supportive data on the US pig industry published late on Friday (Jun 25), which showed the US hog herd down 3.6% to 64.4 million head, its lowest for three years and below most market expectations.

The market hog supply fell 3.7% to 58.6 million head, below all pre-report estimates, with the breeding herd falling by 3% to 5.79 million head.