August 13, 2007

US 2007/08 pork exports seen to decline over weak sales

The US Department of Agriculture lowered its projected volume 2007/08 US pork exports by 45 million pounds to 2.957 billion from 3.002 billion from the previous month's figures in the latest World Agricultural Supply and Demand Estimates, or WASDE, data released early Friday (August 10).

The WASDE report said that pork export forecasts for this year and next "are lowered as shipments remain weaker-than-expected." Through May, 2007 US total pork exports were down 5 percent by volume, with the declines led by Mexico in which volume was down about 42,600 tonnes, or 27 percent, from the same period in 2006, according to the US Meat Export Federation.

The downward revision came despite speculation among pork packers, livestock producers and futures traders that China may purchase a large amount of pork from the US this year due to shortages there caused by disease losses in its swine herd.

Shayle Shagam, livestock analyst with the World Agricultural Outlook Board, told Dow Jones Newswires that the decline in the latest figures was due to shortfalls in the sales to date.

There is a lag of about six weeks from the time product actually ships to when the data become available, and the latest year-to-date figures show a decline.

Shagam said he and others in the department are hearing a lot of talk about China possibly buying more pork and but in terms of definitive sales, information is lacking.

"We think there will be some (pork) movement to China, but we don't know how much," Shagam said.

Lean hog futures prices have been trading in volatile fashion in recent weeks due to speculation that China may purchase potentially large quantities of pork to be shipped this year. However, uncertainty about the volume and lack of confirmation of sales have contributed to sell-offs in futures after sharp gains.

Most-active October lean hogs hit a 3 1/2-week low Friday and as of 10:50 EDT (1450 GMT) are trading at 70.80 cents per pound, down 6.90 cents, or 8.9 percent, from the contract high of 77.70 cents hit last Friday (August 10).