Hog prices rise as swine flu worries abate
MILWAUKEE (AP)--Prices for U.S. hogs and shares of the nation's largest hog and pork producer all soared, May 5, as concern about the international swine flu outbreak seemed to abate, relieving investors' fears that pork consumption would slump.
The trade group representing the nation's pork producers nonetheless asked the federal government to buy up $50 million in pork products to help bolster pricing, saying the industry is incurring accelerating losses due to the outbreak and dwindling exports.
The rise in prices for pork futures and shares of Smithfield Foods erased drops in late April when investors worried about pork consumption plunging.
U.S. health officials have said the H1N1 virus, which causes swine flu, cannot be contracted by eating properly cooked pork. The virus is transmitted among people, not from pigs or pork to humans, officials have said.
But the industry has noted consumption drops and closed export markets as countries and consumers grew leery of pork.
There were signs May 5 that the virus' impact would not be as big as feared. U.S. health officials said they were no longer recommending that schools close in the event of suspected swine flu cases because the virus has turned out to be milder than feared.
Tyson Foods Inc., the world's largest producer of meats, including pork, said May 4 that it expected a drop in demand for pork amid worries about swine flu to be short-lived.
Shares of Smithfield, Va.-based Smithfield Foods rose $2.38, or 24 percent, to close at $12.25 on May 5, on extremely heavy volume. They had ended the first full week of the swine flu scare at $8.61 on May 1.
Futures for lean hogs in June closed at 64.8 cents per pound May 5 at the Chicago Mercantile Exchange, up 1.6 percent, while futures for frozen pork bellies contracts for July, the next month available, rose 1.3 percent to 79.8 cents a pound.
The National Pork Producers Council--the U.S. pork industry trade group--said prices need to go higher and told the U.S. Department of Agriculture USDA Secretary Tom Vilsack in a letter May 5 that the industry losses reached $7.2 million per day between April 24 and May 1.
The group said the pressure comes as meat makers are already hurting from slumping demand and high input costs that pressured margins last year.
The NPPC asked Vilsack to create a USDA purchase program to buy up $50 million in pork, saying that would boost pricing. It suggested using the products in federal food programs. A spokeswoman at the USDA did not immediately return a message left seeking comment.
The group's letter also asked Vilsack to urge President Barack Obama to work with international trading partners to ease restrictions on U.S. pork.
According to the U.S. Trade Representative's office, major American pork importers like Russia and China have banned pork products from a variety of states including California, Kansas and New York. Other countries, like Thailand, Ukraine and Indonesia, have banned certain pork products from the entire U.S.
The U.S. Meat Export Federation, which represents pork and beef interests abroad, estimates that 10 percent to 12 percent of the U.S. pork industry's available international markets have closed since the swine outbreak started.
The U.S. exports about one-fourth of its pork and pork products, creating an export market worth about $4.8 billion in 2008, according to the Denver-based group.