South Korea lean hog futures decline since outbreak of swine flu

 

 

South Korea's lean hog May futures prices fell sharply and its daily trading volume jumped following the outbreak of swine flu, the Korea Exchange said Wednesday (April 29).

 

KRX said the May futures price declined 17 percent in the week to Tuesday to end at KRW4,230 (US$3.15) per kilogram, from the closing of KRW5,115 (US43.81) on April 22.

 

"The price decline seems to have reflected concerns about a potential fall in pork demand with the outbreaks of swine flu, and the spread of swine flu will likely continue to affect the contracts' future movement," said KRX in a statement.

 

The May futures price was down another KRW430 at KRW3,800 at 0228 GMT in heavy volume, according to KRX.

 

The main bourse noted that daily trading volume of lean hog futures also jumped sharply and hit a historic high of 314 tonnes on April 24 when swine flu was reported first.

 

Average daily trading volume has been about 20 tonnes, while volume had already reached about 100 tonnes earlier in the session Wednesday, according to KRX.

 

The Korea Exchange launched lean hog futures trading on July 21 last year, providing a proper hedging tool for swine breeders and pork processors amid rising volatility of hog and pork prices.

 

The index is based on a two-day weighted average price per kilogram of lean hog in the wholesale cash market, calculated by South Korea's Animal Product Grading Service.

 

One contract unit equals 1,000 kilograms and is settled in cash, said KRX.

 

US$1 = KRW1,340.88 (as of April 29)