April 27 (Bloomberg) -- Soybean prices tumbled the most in two months,
and grain futures fell on speculation that a swine- flu outbreak will curb
demand for livestock feed and pork.
The World Health Organization will raise its pandemic alert to an unprecedented
level today, saying that swine flu is spreading across North America, two people
familiar with the agency said. Hog and pork-belly futures plunged 3 cents a
pound, the most allowed by the Chicago Mercantile Exchange. Several nations
banned pork from Mexico and the U.S.
“A pandemic could slow economic activity, cutting into demand for all
commodities, grain included,” Dale Durchholz, a senior market analyst at
AgriVisor LLC in Bloomington, Illinois, said in an e-mail. “Some in the grain
trade fear this could adversely affect world pork trade, cutting into feed
demand.”
Soybean futures for July delivery fell 37 cents, or 3.6 percent, to $9.97 a
bushel on the Chicago Board of Trade. The drop was the biggest for a most-active
contract since Feb. 17. The price has dropped 25 percent in the past 12 months.
Corn futures for July delivery declined 5 cents, or 1.3 percent, to $3.8075 a
bushel. Earlier, the price fell as much as 4.1 percent. The grain has declined
36 percent in the past year.
Wheat futures for July delivery declined 23.75 cents, or 4.4 percent, to $5.195
a bushel, the biggest drop since March 25. The price has slumped 36 percent in
the past year on increased global production and waning demand for U.S. grain.
Bird Flu
More than 100 deaths linked to swine flu occurred in Mexico. Cases have been
reported in the U.S., Canada, Spain, Mexico and New Zealand.
The virus, normally contagious only among pigs, raised concerns that this
outbreak may be similar to the spread of the H5N1 bird flu in Asia during the
past few years. That disease killed several hundred people and led to the
slaughter of millions of chickens and other poultry.
The bird-flu virus never obtained the ability to spread easily among people,
while the swine flu virus that first appeared in Mexico already has acquired
that trait, according to Malik Peiris, a microbiologist with the University of
Hong Kong. There is no vaccine to protect people from the disease.
“It will probably take at least a couple of weeks before we know the outcome of
this disease,” said Dan Basse, the president of AgResource Co. in Chicago.
U.S. Hog Herd
Swine flu is a respiratory disease of pigs caused by type- A influenza that
regularly leads to outbreaks among the animals, according to the U.S. Centers
for Disease Control and Prevention. Three main human flu strains, H3N2, H1N1 and
type B, cause 250,000 to 500,000 deaths a year in seasonal epidemics, according
to the WHO. No reports of this virus have been reported in U.S. hog herds, the
Department of Agriculture said
Pandemics occur when a novel influenza A-type virus, to which almost no one has
natural immunity, emerges and begins spreading.
Consumers have begun to ask supermarkets around the country whether pork can
transmit the virus, Ken Goldman, a JPMorgan Chase & Co. analyst, said in a
report. Goldman lowered his estimates for Tyson Foods Inc. and Smithfield Foods
Inc. earnings this year.
Still, “demand for feed will not be affected except for isolated cases,” Douglas
Carper, the principal of Omaha, Nebraska-based DEC Capital Inc., said in an
e-mail. “Remember, you don’t get swine flu by eating pork, but rather from being
around people affected by swine flu. Furthermore, it is highly treatable.”
China, Russia, Indonesia and the Philippines have blocked imports of pork from
Mexico and parts of the U.S. China banned shipments from Texas, California and
Kansas, according to the country’s General Administration of Quality
Supervision.
Corn is the biggest U.S. crop, valued at $47.4 billion in 2008, followed by
soybeans at $27.4 billion, government figures show. Wheat is fourth, behind hay,
at $16.6 billion.
