U.S. pig virus supply woes drive U.S. hog markets up 6.5 percent

Fri Mar 7, 2014 6:11pm EST
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* Packing plants "adjust" to PEDv impact

* More hog kill cuts seen in coming weeks

* Retail pork, hog prices likely to rise -analysts

By Theopolis Waters

CHICAGO, March 7 (Reuters) - Hog futures at the Chicago Mercantile Exchange surged 6.5 percent this week on tightening U.S. supplies as a deadly pig virus sweeps the country, traders and industry sources said on Friday.

CME lean hog futures finished the week at 113.750 cents per lb, down from a record high of 114.675 cents earlier this week as fears the Porcine Epidemic Diarrhea virus, known as PEDv, is spreading, making it difficult for packers to find hogs to slaughter. That compares with the low this year of 84.500 on Jan. 9.

There was widespread market talk on Friday that big packers, including the world's top pork processor, Smithfield Foods Inc , may reduce production from five days to four as early as next week at its North Carolina plants in Tar Heel and Clinton, and also at its Gwaltney facility in Virginia.

"It's happening throughout the industry. It's not just Smithfield. All pork processors are having this issue with the disease," said one industry source close to the situation who declined to be named because of market sensitivity.

Industry sources estimated the daily slaughter capacity at Smithfield's Tar Heel at 34,000 head and 10,600 at Clinton and Gwaltney.   Continued...