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| Russia’s return expected to give U.S. pork exports a boost |
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U.S. pork producers have won Russia back as a customer, a bullish
development for hog prices and an indication government export
projections are too low, analysts say.
Russia last week agreed to remove restrictions on U.S. pork after banning most shipments in December. Should Russia’s buying rebound toward 2008 levels, the U.S. will be shipping millions of additional pounds of pork overseas. “We believe Russia lifting restrictions will increase pork exports to a larger than projected level,” said Dan Marti, an economist with the U.S. Department of Agriculture’s Economic Research Service. “We’d think that with the ban being lifted, we would return to historical averages. But the magnitude cannot be determined.” Currently, the USDA estimates U.S. pork exports will total 4.5 billion pounds this year, up 8.4 percent from last year, according to the agency’s World Agricultural Supply and Demand report last month. The USDA is scheduled to release its next supply and demand report March 10. Marti declined to comment on whether the USDA would change its projection for 2010 U.S. pork exports. U.S. pork exports sank last year as several countries halted buying on concern over the H1N1 virus. Russia’s imports of U.S. pork tumbled to 289.6 million pounds, down 33 percent from 429.9 million pounds in 2008. Russia’s share of U.S. pork exports fell to 7 percent from 9 percent in 2008, according to USDA data. Russia is the fifth-largest foreign market for U.S. pork, with last year’s shipments valued at $289 million. A return to 2008 levels for Russia’s pork purchases may lift hog prices 50 cents to $1 per hundred pounds, on a carcass basis, from current levels, said Chris Hurt, a livestock economist at Purdue University. Expanding export markets such as Russia is crucial for U.S. pork producers because domestic consumption is expected to decline, Hurt said. Russia lifting import restrictions is an “important step, because exports are really the name of the game to grow the pork business the next few years,” Hurt said. In terms of price impact, the Russia news is “not dramatically bullish, but it’s friendly,” Hurt said. In December, Russia restricted imports from 13 U.S. pork plants, citing traces of banned antibiotics found in some meat. Following negotiations between the two countries, the U.S. agreed to develop a new veterinary certificate to ensure pork exports meet specific Russian microbiological and tetracycline-group antibiotic residue requirements. The USDA also developed an Export Verification (EV) program for pork going to Russia to address specific product requirements. “Our pork meets U.S. and international standards, so we did not see the need for the EV program,” Don Butler, president of the National Pork Producers Council, said in a statement. “But the Russians wanted the program, and we wanted to get back in the market.” The prospect for more demand from Russia helped boost CME Group lean hog futures last week, sending the market to its fourth consecutive weekly gain. Futures fell today, partly on speculation that a halt to slaughtering at a Tyson Foods Inc., plant in Logansport, Ind., would lead to a backup in hog supplies. Tyson suspended slaughtering at the plant, which can process as many as 15,000 hogs a day, on Friday following a fire. Tyson may resume slaughtering at the plant late this week or early next week. “The market’s already digested the Russia news,” said Jim Burns, an independent hog trader at the CME. Traders are watching the Tyson shutdown closely, Burns said, and cited expectations that cash hog prices may weaken later in the week. April lean hogs fell 0.15 cent to 72.95 cents a pound. The contract ended last week at 73.1 cents, the highest closing price since Jan. 20. Source: Bruce Blythe, Vance Publishing |
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