September 14, 2009

Some market analysts speculate that a psychological association of the AH1N1 flu with pork will cause a wintertime decline in pork sales that could benefit beef and chicken.

 

The flu continues to be called "swine flu" in news stories and headlines despite an official change by the Centres for Disease Control and Prevention and the World Health Organization to AH1N1, they said.

 

The link is only marginal since it did not originate with hogs, although it does contain some fragments of a hog flu. People don't get AH1N1 flu by handling or eating pork, but fears that the public will associate one with the other continue.

 

The misappropriation of the name is well-known in livestock industries, and even US Agriculture Secretary Tom Vilsack on Thursday admonished the media for continuing to refer to the disease as "swine flu." He expressed concern that the misassociation of the H1N1 virus to hogs could be harder on the industry than the flu itself, even if some US hogs get the disease, as they are expected to do.

 

Many market analysts said they were confident the US consumer would not pull away from pork in the fall and winter flu season. They believe shoppers will recognize that "swine flu" and H1N1 were the same thing and that this version is a human disease, even if they don't know it carries some scraps of hog flu.

 

They couldn't say the same for foreign consumers, however. Elaine Johnson, market analyst for CattleHedging.com, said the perception of a link between pork and the flu is stronger in China. She pointed to a study by the US Meat and Export Federation that showed one in five Chinese consumers still believes that eating pork can result in catching the flu.

 

Mike Zuzolo, analyst/broker at Global Commodity Analytics, said in an email that the timing of the virus' peak could be important. If the rate of illnesses gets bad this fall and toward the holidays, "I'm guesstimating that US pork demand could fall 2 percent to 3 percent in the fourth quarter and be picked up by increasing poultry and beef demand, with those two roughly splitting the loss in pork."

 

Johnson said a 1 percent shift in pork demand could result from flu fears, "but I wouldn't think it'd be much more than that."

 

Zuzolo said the weakening US dollar could help exports as 2010 nears, but not if H1N1 were to become severe globally. The fear of disease likely would offset any positive effects of a weaker dollar on pork prices. In this case, foreign buyers may substitute US beef or poultry for US pork, he said.

 

Daniel Bluntzer, livestock market analyst for Frontier Risk Management, was the odd man out, saying he didn't think there would be a discernible decline in US pork demand from flu fears. Even when the flu broke out earlier this year and pork demand sagged, it was difficult to isolate whether a pork demand decline was linked to flu fears or market conditions.

 

"The market was terrible anyway," Bluntzer said.

 

When prices slid in July and August, the October futures market had peaked at more than US$60 in mid-July, Bluntzer said. A month later, it was at US$44 as panic selling came in. He admitted that some of the selling could have had links to fears of a consumer backlash against the product, but said more pork was being produced than the market could handle.

 

Hog weights were 2 percent more than a year earlier, which is almost like killing that many more hogs. Plus, the US slaughtered more than 300,000 more hogs in June through August than US Department of Agriculture hog inventory reports said were available.

 

This week's cattle slaughter was estimated at 562,000 head, compared with 655,000 a week ago and 655,000 a year ago. Year-to-date cattle slaughter is down 4.9 percent from a year ago.

 

The week's hog slaughter estimate was 2.050 million head, compared with 2.256 million a week ago and 2.296 million a year ago. For the year, hog slaughter is off 3.3 percent.

  

The USDA estimated total beef, pork and lamb production for the week at 857.9 million pounds. Last week's output was 973.2 million pounds, and the year-ago figure was 975.9 million pounds. Year-to-date output is down 3.1 percent.

 

Broiler/fryer slaughter for the week was estimated at 165.570 million head, compared with 165.093 million a week ago and 144.936 million a year ago.