U.S. pork prices rise as foot-mouth spreads in Europe

U.S. pork prices rise as foot-mouth spreads in Europe

U.S. hog and pork prices jumped for a second day on Thursday on signs that foot-and-mouth disease may have moved closer to Denmark, Europe's top pork exporter, as health authorities investigated suspected cases in neighboring Germany and in Luxembourg.

Four European countries now have confirmed the presence of the disease. Ireland reported its first case on Thursday, joining Britain, France and the Netherlands. Germany should know by Saturday and Luxembourg by next week if they have the disease.

But U.S. livestock traders continue to focus on Denmark, the main competitor with the United States for the lucrative Japanese pork market. If the disease arrives there, U.S. hog and pork prices will move even higher.

"If it continues to spread, your chances of contamination in Denmark are big," said Jim Clarkson, livestock analyst with Chicago-based A. & A. Trading Inc. "If Denmark is out of the export market, you could take the June hogs to 75 cents."

Chicago Mercantile Exchange hog and pork prices are at their highest levels since last summer. On Thursday, the CME June hog contract closed at 69.475 cents per pound, up 1.000 cent.

Pork bellies, the raw material for bacon, rose 2.100 cents in the May contract to 91.475 cents per pound.

A confirmed case in a country leads to a suspension of livestock and meat exports. If Denmark's pork exports are shut down, the United States and Canada would likely pick up the Japanese business, analysts said.

In 2000, Denmark exported an estimated 568,000 metric tons of pork to non-European countries, an amount nearly equal to U.S. pork exports, said Ron Plain, agricultural economist at the University of Missouri. It also supplied a third of Japan's pork imports last year.

On Thursday, the Irish republic confirmed its first foot-and-mouth disease outbreak after sheep on a farm near the border with Northern Ireland tested positive.

The European Union responded by banning exports of livestock from Ireland and exports of milk, meat and meat products from the affected county.

A U.S. Agriculture Department official said Thursday the United States would not review its ban on imports of live animals and raw meat products from the European Union until the foot-and-mouth outbreak is under control.

Foot-and-mouth disease, characterized by blisters in the mouths and on the feet of cloven-hoofed animals, can be fatal to animals. It poses little health threat to humans, but it can cost farmers millions of dollars in losses as herds are destroyed.

German regional health authorities said on Thursday they were investigating suspected foot-and-mouth disease at a pig farm in northern Germany. Blood samples have been sent to a state laboratory and a result was expected on Saturday.

Sheep that came from the Netherlands were being tested in Luxembourg, even though the animals had not shown any symptoms. Test results should be available next week.

Britain reported its first case of foot and mouth disease in 20 years on February 21. Three weeks later France confirmed its first case, followed by the Netherlands on Wednesday and Ireland on Thursday.

"I think most traders believe that it is going to spread right through continental Europe," said Wally Labuz, a Chicago livestock trader with Rosenthal Collins Group. "Denmark will probably eventually get it."

The higher CME hog and pork markets suggest pork producers may already be stockpiling pork in anticipation of increased export business, said Labuz.

"I do believe we are putting meat away for it," said Labuz. "There is no question that there is a lot of speculation that there is going to be an increase in export business. These guys are pricing the market for it."

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