LIVESTOCK-Hogs at 3-mth high as China plans lifting ban
(Adds details on swine fever in Russia, updates prices)
By Jerry Bieszk
CHICAGO, Oct 29 (Reuters) - Hog futures rose for a fourth straight day on Thursday to three-month highs as China signaled it would lift a ban on U.S. pork put in place after the outbreak of the pandemic H1N1 flu.
Trading in hog futures at the Chicago Mercantile Exchange was heavy, concentrated in the benchmark December position.
Shares of Smithfield Foods Inc (SFD.N), the largest U.S. hog and pork producer, rose 80 cents, or 6 percent, to close at $14.02 on prospects for increased exports to China.
Traders and analysts said hog futures benefited from news that China would lift the ban it imposed five months ago on U.S. pork. They also cited further buying by funds that were largely responsible for gains the past three days.
December lean hogs 2LHZ9 closed up 1.250 cents at 57.200 cents per lb and February 2LHG0 was up 0.950 at 63.175 cents. Both months posted three-month highs.
The market also got a lift from talk that Russia, a major market for U.S pork, was buying hams from the United States. There was also growing concern over the spread of African Swine Fever in Russia, which could possibly lead to more imports.
The deadly hog disease was discovered in northwestern Russia this month, close to the country's second-largest city of St Petersburg.
Since then five new outbreaks had been registered in the southern region of Rostov, the Russian animal and plant health watchdog said on its web site www.fsvps.ru.
A note the U.S. Meat Export Federation sent to members on Wednesday said the disease threatens Russia's attempts to become self-sufficient in pork production.
The unexpected rally saw players who had bet that the market will go lower, scrambling to cancel out their short, or sold, positions, by buying hog futures.
RUSSIA BUYS HAM
"Russia bought some hams, they (prices) were up pretty good last night and potentially China is going to come back into our hog market," said Bill Cipolla, an independent hog trader.
The U.S. Agriculture department on Wednesday afternoon said the average cash price for ham rose $4.84 to $55.69 per cwt.
U.S. Agriculture Secretary Tom Vilsack and Trade Representative Ron Kirk, who were visiting China, said on Thursday that Beijing planned to lift its ban on U.S. pork.
Kirk and Vilsack met their Chinese counterparts for talks in Hangzhou, China, this week. They, however, did not specify when China would lift it's ban.
China imported $560 million of U.S. pork in 2008, primarily to ensure sufficient supplies during the Olympic Games hosted by Beijing last August. Imports have since dwindled, with China also taking steps to increase its domestic hog herd.
"While this is good news, we don't see any lasting surge in buying of pork. They don't want the product," said Rich Nelson, analyst with brokerage and research firm Allendale Inc.
Traders and analysts said there were other factors at play in the rally of hog futures, like the weak U.S. dollar, buying by investment-speculative funds and commercials.
A weak dollar will help bolster U.S. exports. The dollar index .DXY was down 0.58 percent against a basket of currencies after data showed the U.S. economy returned to growth in the third quarter, reducing the greenback's safe haven allure and sending investors to other assets. (Reporting by Bob Burgdorfer and Jerry Bieszk; Writing by K.T. Arasu; Editing by David Gregorio)
