April 27, 2009
Asia Grain Outlook on Monday: Prices may be hit on swine flu fears
Grains prices are likely to take a hit this week if the swine flu virus continues to spread.
The emergence of swine flu virus in Mexico, which has killed 103 people so far, and its spread across North America has led to fears of a global pandemic that could affect pork consumption and hence demand for animal feed products such as corn, soymeal and feed wheat.
In Asian trading of Chicago Board of Trade contracts, soy, corn and wheat futures are trading sharply lower.
At 0548 GMT, CBOT's May corn contract was trading 14.25 cents lower at US$3.6275/bushel, while May soys were off 48.75 cents at US$9.9150/bushel. May wheat is also down 12.25 cents at US$5.2000/bushel.
Analysts are still unsure about the possible extent of the impact of the swine flu virus on feed demand, since the outbreak came to light over the weekend.
"I certainly think there's the potential for a curb in demand for feed and underlying grains, such as corn or soymeal as it may disrupt livestock demand. But these are still very early days yet and one has to see how the situation develops in the short-term," said Luke Mathews, commodities strategist for Australia's Commonwealth Bank.
In a bid to reassure consumers, the World Health Organization has said that consumption of pork doesn't spread the disease.
"Right now there is no evidence to suggest people are getting infected by exposure to pork or pigs," said Keiji Fukuda, the WHO's temporary assistant director-general for Health Security and the Environment.
Nevertheless, Asian countries such as China, the Philippines and Thailand have banned imports of pork from Mexico and the U.S.
Asian consumers have so far not reacted sharply to the swine flu virus news, though the situation is still fluid and prone to change.
"While so far Japanese consumers haven't really reacted to the swine flu news, there's concern that if the scare persists, people may end up avoiding pork and that could affect feed demand. It's too early in the day to predict how this pans out," said Nobuyuki Chino, who buys feed grains for Tokyo-based Unipac Grains.
