August 10, 2009

US hog prices have significantly dropped to their lowest levels in nearly two years with investors worried about an autumn resurgence of AH1N1 flu.

University of Missouri agricultural economist Ron Plain said the hog industry is worried that AH1N1 will re-occur.

Talk that producers have been slow to reduce their herds despite nearly two years of losses also prompted selling at the Chicago Mercantile Exchange hog markets.

At the CME, the August hog futures 2LHQ9 were down 1.250 cents at 52.725 cents per pound (lb) and October 2LHV9 off 1.125 cents at 49.000. Some 2010 contracts briefly dropped the 3-cent daily limit.

James Burns, a hog trader at the CME he hopes swine flu will eventually be called AH1N1 which will help boost the hog industry.

Eventually all these producers are going to be forced into liquidation as there are too many hogs, said Burns.

Smithfield Foods and Tyson Foods have taken the lead in liquidating some of their hog breeding herd. However, sow slaughter is actually down from a year ago, said Plain.