April 29, 2009
Feed markets may benefit if consumers switch from pork to beef
Crops used for animal feed, such as corn and soy, may benefit from consumers switching from pork to beef following the swine flu outbreak, Eugen Weinberg, analyst at Commerzbank, said Tuesday (April 28).
With consumers expected to reduce pork consumption in the short term for fear of contracting swine flu - despite the World Health Organization''s reassurances that the flu cannot be caught by eating pork - pig prices are likely to come under pressure.
"Cattle prices, however, are likely to benefit from the current trend, as consumers may switch, at least for the short term, from pork to beef," said Weinberg.
"Cattle fattening is more feed intensive than pig fattening," he said.
In Monday''s trading session, US May pig futures fell by their 3-cent limit, while corn and soy futures also fell on concerns of a fall in pork demand, although losses were trimmed by the end of the session.
Cattle futures initially followed the pig market lower, before managing to trade in positive territory on the theory beef consumption might rise.
However, "the link between swine flu outbreak in humans and feedgrain consumption is tenuous and largely psychological," said Lewis Hagedorn, commodities analyst at JPMorgan.
"For now, we assume a short-term focus on bearish demand psychology in the grain and oilseed markets but a limited further decline in prices," he said.
