September 7, 2009

The development of vaccines against the novel AH1N1 flu in humans should help hog and pork prices in the longer term, but that is only part of the solution needed to cure ailing US pork exports.

 

Other factors including the economic crisis, imbalanced exchange rates, trade issues and increased hog production in China have contributed to the first year-on-year decline in US pork exports in nearly 20 years, analysts said.

 

But the discovery of the new flu in late April and labelling of it as "swine flu" initially led to concerns worldwide about eating pork and pressured sales. The new virus contains genetic materials from human, swine and avian forms of flu. Later, at the urging of the pork industry, the US and world health officials began referring to the disease as Type A/H1N1 flu.

 

Despite assurances from international health organisations that pork was safe, some countries initiated bans on pork imported from Mexico and US states where cases of AH1N1 were first reported in late April. Lean hog futures and the cash markets fell sharply at that time, and although prices recovered most of those losses within two weeks, the markets have remained sensitive to reports of AH1N1 outbreaks elsewhere throughout the summer.

 

Any information that creates or adds to uncertainty about demand, whether real or perceived, tends to pressure prices for that particular commodity, said a veteran futures broker/commodity trader. Conversely, having vaccines against the disease may ease the concerns of consumers who were previously limiting or avoiding pork, so it should be considered supportive for prices.

 

Since a few months have passed from the time the new form of flu was first discovered, health experts can talk with more confidence now about the disease, said Ron Plain, agricultural economist at the University of Missouri. The AH1N1 flu is not as virulent or deadly as was first feared, but the initial concerns have carried over longer in some countries than others.

 

Other parts of the AH1N1 education process include common practices used in helping prevent any form of flu or illness, said Joe Schuele, communications director with the U.S. Meat Export Federation. For most people, the AH1N1 flu has not been any worse than other types of flu, he said in an interview with Dow Jones Newswires.

 

"Nearly two-thirds of China's consumers stopped eating pork in the early stages of the H1N1 flu outbreak this year," the USMEF said in a news release Thursday (Sept 3). More than one in five consumers in the world's largest pork market still believe that eating pork can result in catching the AH1N1 flu virus, according to a survey of 1,200 Chinese consumers commissioned last month by the USMEF.

 

"The research suggests that the initial Chinese consumer reaction to AH1N1 was sharp, and that a significant number of consumers may still associate the virus with pork and hogs," said Joel Haggard, senior vice president Asia-Pacific for USMEF.

 

Some human vaccines against the AH1N1 flu are being distributed already and others are still being developed and tested. Chinese officials reported Thursday that a single-dose vaccine has been approved for commercial production, according to a Wall Street Journal report. Other AH1N1 vaccines to date require two doses, and a single-dose type would treat more people.

 

Schuele said pork exports to Mexico have rebounded from the initial decline in late April and early May after the discovery of AH1N1 flu. Growth in sales of US pork to Japan, Mexico, Australia, and the Central American region since May has helped offset declines to China and Russia.