US hog market drops as flu hits pork sales

U.S. hog prices fell sharply on Thursday as the market grew more worried that consumers afraid of swine flu will avoid pork, despite scientific evidence the meat is safe and the flu spread by human contact.

Georgia, Minnesota and Nebraska confirmed their first human cases of the H1N1 flu, commonly called swine flu. Other states that have had cases include California, Texas, and Kansas.

In all, 13 countries have banned pork or meat from U.S. states that have had human cases of the flu. That list includes China and Russia, important buyers of U.S. meat that have been working to increase their own meat production.

U.S. wholesale pork prices fell on Wednesday due to an expected slowdown in export sales and to meat companies cutting prices to induce sales in the current flu-sensitive environment, analysts said.

"It is flu-related in that business has slowed down," said Dennis Smith, a livestock broker with Archer Financial.

The flu originated in Mexico, and traders said a sharp slowdown in consumer activity there could hurt U.S. pork sales to that country, a leading buyer of U.S. beef and pork.

More than 176 people have died in Mexico since the first cases were reported there last week. The only U.S. death was a Mexican boy who had traveled to Texas.

Mexico's government on Wednesday called on large segments of the economy to shut down for five days in an effort to stop the disease from spreading further.

Airlines and travel companies have reduced trips to Mexico, which should hurt tourism and further reduce demand there for meat and other goods.

At the Chicago Mercantile Exchange, where cattle and hog prices are set daily, hog prices tumbled this week. The actively traded June hog futures was down 3 percent Thursday morning at 64.700 cents per lb, and down nearly 10 percent since Friday.

The sharp drop in hog and pork prices has hurt U.S. hog producers, who were already struggling as the recession hurt demand for pork.

The U.S. Meat Export Federation said on Wednesday that U.S. pork exports had dropped 8 to 12 percent in a few days as the flu prompted countries to ban the meat.

Shares of hog and pork producer Smithfield Foods Inc. fell on Thursday. The company had repeatedly said the flu has not hit any of its employees or hogs here or in Mexico.

In morning trading, Smithfield Foods shares were down 22 cents, or 2.4 percent at $8.94 at the New York Stock Exchange. Since Friday, the shares have slid 13.4 percent.