AH1N1 curbs demand amid ballooning US pork supply

US pork supplies stuck in storage ballooned to the highest level ever for the month of June as consumers switched to other meats amid the spread in swine flu, the government and analysts said on Wednesday (July 22).

 

Analysts believe data from the US Agriculture Department should pressure Chicago Mercantile Exchange lean hog futures when pit trading in Chicago reopens on Thursday morning.

 

USDA data showed that total pork stocks in June of 578.8 million pounds (lbs) were down one percent from May but were up nine percent from a year ago, and hit a record by end-June.

 

Livestock analyst Rich Nelson of brokerage Allendale Inc said pork supply had a drawdown of 6 million pounds from last month wherein typically there are about 40 million pounds.

 

He added that, the built-up in stocks showed that US pork exports continued to be curtailed by AH1N1 or swine flu.

 

AH1N1, despite being spread by humans, caused the first influenza pandemic of the 21st century, spreading globally in just a few weeks, infecting millions.

 

Traders have blamed the spread of the flu to consumers shying away from pork. CME lean hog futures have tumbled about 30 percent since peaking at 90 cents a lb in August.

 

Nelson said this confirms export problems, citing slow sales to China in particular.

 

Ron Plain, livestock economist at the University of Missouri, said the June data compared with the all-time record for any month of 663 million lbs in storage on April 30, 2008.

 

He said it was the weekend of April 25th and 26th is when AH1N1 hit the news. Pork stocks started growing in May and that continued into June, Plain noted.

 

He added it was just last year that record for pork in cold storage was set and now, it's just above 600 million earlier this year."

 

Stocks were at a record high last year as the industry increased stocks to meet demand from China when the country hosted the summer Olympics in 2008.

 

Ham stocks rose 23 percent from end-May. Ham prices, according to Plain, were pathetic in June and apparently for good reason. For that much to be put into cold storage it obviously wasn't a product that was moving very fast, he said.

 

Mexico was the biggest market for ham exports and the whole H1N1 thing slowed movement of product to the south, said Plain.