April 29, 2009

US hog prices fell sharply on Tuesday (Apr 28) as the market remained concerned that swine flu cases worldwide will hurt trade and meat sales.

Shares of leading US meat companies had not rebounded fully from Monday's (Apr 27) sharp losses.

The weakness is psychological in nature as the disease is not transmitted through pork consumption, said Doug Harper, analyst with Brock Associates, in regard to the markets' reaction to swine flu.

But some countries have banned North American pork and the extent of the flu's long-term impact on livestock and equity markets will depend on how widespread the outbreak becomes, Harper said.

Chicago Mercantile Exchange (CME) hogs for June delivery fell 2.3 cents or 3.35 percent to 66.350 cents per pound. The June hogs closed down the three cent per pound daily limit on Monday.

CME July pork belly contract was also down the three cent limit at 77.8 cents per pound.

The flu has killed up to 149 people in Mexico and sickened 40 in the US, while countries worldwide have also reported of suspected cases. So far, no one outside Mexico has died from the virus, which is not related to hogs or transmitted by pork or any other meat.

Russia, a key market for US meat, has banned raw meat imports from US states that have had human cases of the flu. China has also banned pork imports from some US states.

Shares of Smithfield Foods, the largest US hog and pork producer and co-owner of a Mexican hog production facility, moved higher early on Tuesday but had not recovered from Monday's losses.

Smithfield said none of the hogs or employees at the Mexican facility had swine flu, and that it was cooperating with Mexican authorities to investigate the source of the flu.