Pig virus fears again pump U.S. pork stocks to record high

CHICAGO Fri Feb 21, 2014 7:24pm EST

CHICAGO Feb 21 (Reuters) - The amount of pork in U.S. cold storage warehouses in January hit a record high for a second month in a row, according to the U.S. Department of Agriculture's monthly cold storage report issued on Friday.

Analysts in part attributed last month's record stocks to processors and packers who likely stockpiled product in anticipation of tighter supplies as a deadly pig virus spreads on U.S. farms.

Friday's USDA report showed pork inventories last month totaled 623.7 million lbs, up 69.4 million from December and up 17.3 million from a year ago. It was the most ever for the month of January after surpassing the 554.3 million record in December and January 2013's record of 606.425 million.

"Pork stocks fed off December's record and inventories usually increase in January," said independent market analyst Bob Brown.

Pork bellies, which are processed into bacon, represented the lion's share of that increase as end-users stocked up for peak summer demand.

Total belly storage last month was 86.4 million lbs, a 6 million lbs rise from the end of December and 50 million lbs more than a year earlier.

Pork bellies are expected to be in short supply during the summer when they hit their highest price, said University of Missouri economist Ron Plain. The data may reflect someone's decision to store bellies in anticipation of potential profits later as supplies tighten during that period, he added.

Hogs typically are less available during the summer when extreme heat slows down weight gains and interfere with conception.

The outbreak of the Porcine Epidemic Diarrhea virus (PEDv), which is fatal to baby pigs, is expected to shrink hog numbers even more, beginning in the spring of 2013 through the remainder of the year.

So far, at least 4 million pigs have died from the disease, National Pork Producers Council chief veterinarian Liz Wagstrom said at USDA's Outlook Conference in Washington, D.C.

Allendale Inc chief strategist Rich Nelson said: "People are suggesting that wholesalers are building pork stocks in perpetration for tight supplies ahead. I would throw in the PEDv issue as an secondary note."

He cited pork export disputes between the United States and China as a potential reason for the buildup in pork stocks last month.

"Chinese hog farms flipped over to net losses in December, and there is a very strong correlation between their hog prices and when they import from the United States," Nelson added. (Editing by Andre Grenon)

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