Fall in US hog prices

07-08-2009 | |

US hog prices have fallen to their lowest levels in nearly two years with investors worried about an autumn resurgence of H1N1 flu.

“In the hog industry, there is a fair amount of concern that it (H1N1) will be back in the news a lot,” said Ron Plain, University of Missouri agricultural economist.

Talk that producers have been slow to reduce their herds despite nearly two years of losses also prompted selling at the Chicago Mercantile Exchange hog markets.

At the CME, the August hog futures 2LHQ9 were down 1.250 cents at 52.725 cents per lb and October 2LHV9 off 1.125 cents at 49.000. Some 2010 contracts briefly dropped the 3-cent daily limit.

H1N1/Swine flu
“Hopefully the press will continue to call it H1N1 and not call it swine flu. Obviously that’s something that is going to weigh on these markets,” said James Burns, a hog trader at the CME.

“Eventually all these producers out there are going to be forced into liquidation,” said Burns. “There’s too many hogs out there and they have not liquidated enough.”

Smithfield Foods and Tyson Foods have taken the lead in liquidating some of their hog breeding herd. However, sow slaughter is actually down from a year ago, said Plain.