February 1, 2011

South Korea raises pork quota, Chicago hog futures skyrockets



South Korea elevated its pork imports quota following a foot-and-mouth (FMD) epidemic, lifting the livestock complex, as Chicago hog futures reach a record high.


Chicago's best-traded April lean hog contract hit 92.32 cents a pound on Friday, the highest ever for a nearest-but one lot, reviving cattle prices too, despite falls of some US$0.50 in beef cut-out values and weaker cash cattle markets - indicators which usually set the tone for futures trading.


The jump followed a 60,000-tonne increase to the pork volume that South Korea will allow to be imported quota free, to fill a void in meat supply created by the foot-and-mouth outbreak, which has cost US$1.6 billion so far to tackle and seen 2.2 million animals killed, on United Nations (UN) estimates.


Additionally, South Korea is fighting a bird flu outbreak, of which some 40 cases have been confirmed since its discovery last month, prompting the culling of some 5.5 million poultry.


The crisis has prompted outrage among South Koreans, who have a largely carnivorous diet. The country ranked as fourth among pork importers and third in buyers of foreign beef, net of exports, even before the epidemic.


To help keep up supplies, South Korea has purchased 25% of US beef exports so far this year, and "the market remains nervous" that imports will increase further, sapping meat supplies, US Commodities said.


Official data due later on Friday are expected to show the US cattle herd shrinking to its smallest since 1958.


It is said that the South Korean government will want to keep people happy, and the quick way to do that is to import more meat.


However, the industry is also concerned that the virus, which is highly contagious, and can survive outside an infected animal for several hours, could spread to surrounding states.


US Commodities said: "Just think if hoof-and-mouth would spread to other countries like China."


The UN's Food and Agriculture Organisation (FAO) earlier this week warned that the outbreak "must be tackled as a regional problem", unveiling plans for a meeting of east Asian countries to discuss the epidemic.


The FAO highlighted reports of the disease reaching North Korea, and concerns over the timing of the outbreak, ahead of Asia's lunar new year celebrations.


"Large numbers of people will be on the move in the region, many of them carrying meat products and some transporting animals," Juan Lubroth, the FAO's chief veterinary officer, said.


In Chicago, lean hogs for April ended 0.5% higher at 92.05 cents a pound, while the near-term February contract added 0.4% to 86.05 cents a pound.


In the cattle complex, live cattle for February closed up 0.1% at 107.65 cents a pound. The spot feeder cattle lot, for March delivery, added 0.4% to 126.725 cents a pound.

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