May 6, 2009

                        

 

The spread of influenza A (H1N1) virus, which was previously known as swine flu, might help accelerate the debut of China's hog futures market, some industry observers said.

 

The outbreak of the H1N1 virus has led to a sharp fall in hog prices during the past week.

 

The launch of livestock futures may help to stabilise the price of the product and protect hog breeders and processors from drastic price fluctuations, said Feng Yonghui, chief analyst from AND Group, a Beijing-based agriculture service provider.

 

According to data from Beijing Orient Agribusiness Consultant Co Ltd (BOABC), China's largest agriculture and food consulting company, hog prices have dropped from RMB13.41/kg in January to RMB9.88/kg in April.

 

China's State Council issued a plan on February 2 to stimulate the development of agriculture and increase farmers' incomes, which for the first time, said the government would adopt measures like futures exchanges to develop the hog breeding industry.

 

Dalian Commodity Exchange started the trial run for livestock futures delivery in 2007 but the trading proposal has not been approved by the top authorities yet.

 

Meanwhile, Guo Huiyong, an analyst from BOABC, said trading in hog futures was unlikely to occur this year as the top regulators have to deal with concerns such as establishing the standards to examine and quarantine livestock, which becomes increasingly difficult with the outbreak of the flu virus.