Glacier FarmMedia COVID-19 & the Farm

U.S. hogs tumble on Japan demand worry after quake

U.S. hog futures fell Friday, closing at their lowest in four days on worries that sales could slow to Japan, the top export market for U.S. pork, after a massive earthquake damaged ports and roadways.

“We have to assume lower demand from Japan from consumer fear and confusion. Additionally, we have to assume a portion of their port capacity is damaged as well,” said Rich Nelson, analyst with Allendale Inc.

Traders watched TV screens on the Chicago Mercantile Exchange (CME) trading floor that showed earthquake damage in Japan, and swift-moving floods that washed away cars and debris.

“The concern is if the ports are down they can’t get meat into the country,” said James Burns, a Chicago hog trader.

In 2010, Japan was the top export market for U.S. pork, taking 1.285 billion pounds, or $1.65 billion worth, and the No. 3 market for beef at 351 million lbs., about $639 million worth (all figures US$).

Transportation has been disrupted with commuter lines down and road traffic slowed to a crawl, according to U.S. Meat Export Federation (USMEF) staff in Japan.

“USMEF staff reports that road traffic is moving slower than a walking pace, which is making it difficult for retail and food service outlets to receive shipments of perishable products,” said Jim Herlihy, a federation spokesman.

At the CME, April hogs were pressured by funds buying June and selling April to move longs to June. Such spreading, which was active all week, should slow next week, traders said.

The U.S. Meat Export Federation said it is too soon to know if pending meat shipments have been affected or delayed.

April hog futures closed down 1.700 cents, or 1.89 per cent, at 88.150 cents per pound, their lowest close since Monday. The June was down 1.950, or 1.92 percent, at 99.500 cents.

Beef prices

Cattle futures finished mostly lower as they also were pressured by the earthquake.

Higher beef prices on Friday briefly turned futures higher near midday. The U.S. Department of Agriculture reported the average wholesale choice beef price, or cutout, was $180.93 per hundredweight (cwt), up $2.12 from Thursday and the highest since 2003.

Meat companies have raised beef prices to offset the record prices they paid for cattle. Cash cattle traded at $5 higher this week at $118/cwt, as fewer cattle forced high bids from packers.

June/April spreading by funds supported the June.

April cattle futures closed down 0.525 cents at 117.125 cents per pound and June was unchanged at 116.950 cents. Earlier, April dropped to 115.975 cents and June to 115.100.

Feeder cattle finished mostly higher, helped by double-digit declines in corn futures.

The March feeder cattle closed down 0.250 cent at 131.550 cents while April was up 0.325 cents at 134.525.

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