Reports of sick cattle in Asia may help North American prices
Word from Japan on the weekend of an outbreak of foot-and-mouth disease at a farm helped raise cattle and hogs futures prices in Chicago on Monday.
Ten beef cattle in southwestern Japan are suspected of having been infected with the disease, a virus-induced ailment that can be fatal to livestock. The cattle were destroyed and officials are investigating the matter.
There were few details at press time, but the spectre of the devastating 1997 Taiwan outbreak that forced the slaughter of 3.85 million hogs is fresh in the industry’s mind.
Read Also
USDA’s August corn yield estimates are bearish
The yield estimates for wheat and soybeans were neutral to bullish, but these were largely a sideshow when compared with corn.
There are also some reports that foot-and-mouth has made an appearance in South Korea.
Japan and Korea are big customers of Canadian beef and pork. If foot-and-mouth disease proves to be a widespread problem there, it would help to improve the already bullish beef and hog sectors here.
Hog futures prices were rising anyway March 27 after Friday’s United States Department of Agriculture hog report for March.
Contract months into the summer rallied on the news that the number of females kept for breeding was 95 percent of a year ago. That was one percent lower than analysts expected.
This indicated the hog cycle has not bottomed and expansion is not yet beginning.
In their analysis of the report at www.ssu.missouri.edu/faculty/rplain/default.htm, Glenn Grimes and Ron Plain of the University of Missouri point out that the breeding herd is becoming more efficient.
For example, the breeding herd this winter was down seven percent compared to a year earlier, but the number of piglets born was down only two percent.
They said numbers from the report do not indicate summer prices as high as $50 (U.S.) per hundredweight as some have forecast.
Their estimates are: First quarter $38.56 per cwt.; second quarter $42-$45; third quarter $41-$44; and fourth quarter $39-$41.
Plain also said strong demand, not herd reduction, is the reason for improved hog prices.
American hog supply is down only about three percent from last year, but the price is up 45 percent.
The key is the runup in bacon prices, due largely to big fast food chains adding bacon to burgers.
The restaurants, fearful of accidentally causing widespread food poisoning, are overcooking the beef patties. This reduces the beef’s flavor and to make up for it, they add bacon.
