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| Pork drops 30% in futures as flu cuts Chinese imports |
| Bloomberg / Aug 18, 2009, 00:47 IST |
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Pork, the fastest-growing US meat export of the past decade, is sick with swine flu.
Hog futures, the second-worst commodity investment of 2009, may fall 33 per cent by year-end from 44.65 cents a pound on August 14. US exports plunged 20 per cent in the first half and are heading for the first annual decline since 1990 after the H1N1 virus outbreak in April led to import restrictions in China and Russia. Tyson Foods Inc idled slaughterhouses, and US hog farmers haven’t been profitable in a year.
Swine flu will contribute to an 11 per cent drop in global pork trade this year, even after scientists said the meat is safe to eat, United Nations data show. Slumping exports, the global recession and improvements in breeding methods left US inventories in June at a record high level for the month.
“What do we do with all these hogs?” said David Kruse, a commodity trading adviser at CommStock Investments Inc in Royal, Iowa. “The industry is just not structured to modify production in response to reduced demand. The industry is basically structured to go broke. It will produce hogs until it runs out of money.”
After falling last week to the lowest price since November 2002, hog futures may average 30 cents to 32 cents a pound on the Chicago Mercantile Exchange in November because of unwanted supply, said Glenn Grimes, a livestock economist at the University of Missouri in Columbia who’s followed the industry for more than 50 years.
Farmers are losing $30 to $35 on every pig they sell this month and may not make money until May, Grimes said. Producers have been unprofitable for 20 of the 22 months through July, and more than 5,000 of them may need to exit the business, he said.
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