Hog Report Neutral To A Bit Friendly

BSE announcement could lift hog prices and soften beef prices Monday. John Otte

Published on: Jun 27, 2005

Going into USDA’s June Hogs & Pigs Report Friday, trade guesses averaged up 1% on most major hog inventory categories. Guesses ranged from even to up 2%. That tight range set the stage for a ho hum hog report.

Then USDA set off the fireworks by announcing that it had received final test results from the Veterinary Laboratories Agency in Weybridge, England. The results confirm that a sample from an animal that was blocked from the food supply in November 2004 has tested positive for bovine spongiform encephalopathy (BSE).

Ag Secretary Mike Johanns directed USDA scientists to work with international experts to thoughtfully develop a new protocol that includes performing dual confirmatory tests in event of another "inconclusive" BSE screening test.

Consumers should remain confident

"We’re testing nearly 1,000 animals a day as part of our BSE enhanced surveillance program," says Johanns. "This animal was blocked from entering the food supply because of the firewalls we have in place. Americans have every reason to continue to be confident in the safety of our beef.

"I want to make sure we continue to give consumers every reason to be confident in the health of our cattle herd," stresses Johanns. "By adding the second confirmatory test, we boost that confidence and bring our testing in line with the evolving worldwide trend to use both IHC and Western blot together as confirmatory tests for BSE."

Farrowing plans may lift deferred contracts

Producers told USDA they intend to hold both June-August and September-November farrowings steady with last year. On average, traders expected those farrowing intentions to be up 0.5% and 1%, respectively.

The smaller than expected farrowing plans may give deferred lean hog futures a bit of a boost on Monday. Producers are wise to keep a tight lid on expansion. Producers and lenders remember the adverse impact outpacing slaughter capacity had in 1998. Ample signs exist that demand is losing steam. One clear sign is pork belly stocks in cold storage at near triple year ago levels that turned up in USDA Cold Storage Stocks Report at mid week.