U.S., Canada suffer economic toll as flu hits hogs

Mon May 4, 2009 5:45pm EDT
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By Jerry Bieszk

CHICAGO (Reuters) - Canada threatened action against China and U.S. meat packing companies sliced pork production due to falling retail orders as import bans sparked by the H1N1 flu took an economic toll in the recession-hit United States and its northern neighbor.

After taking a beating last week, hog markets were pounded again on Monday amid fears the flu virus that has infected more than 1,000 people around the world would weaken consumer demand. About 20 nations have banned pork imports from the United States, Canada and Mexico.

In a sign of the flu's impact on trade, government data showed that the number of hogs slaughtered by U.S. meat packers on Saturday tumbled 63 percent from a year ago, bringing into focus a buildup in supply that would further hurt business.

"Actually I am far more concerned about the building backlog of heavyweight slaughter hogs as a result of packer slaughter slowdowns. It is going to take a while for this to be cleared out," said Don Norcini, an independent hog trader.

"As much as I want to see this situation go away, the damage has been done and it is not going to disappear in a week's time," he added.

Canada, meanwhile, threatened to take China to the World Trade Organization unless Beijing lifted its ban on Canadian pigs and pork from the province of Alberta, where the new flu strain was detected for the first time in a herd of swine.

The hogs were infected by a person who had been to Mexico.

MF Global Research analyst Rich Feltes wrote in a note to clients that "our sources indicated that retailers slowed pork orders last week, taking a 'wait and see' posture on whether (U.S.) domestic pork demand was indeed damaged.   Continued...