Smithfield shares fall as China pig supplies rise

CHICAGO, Sept 18 (Reuters) - Shares of U.S. meat producer Smithfield Foods Inc (SFD.N) fell sharply on Tuesday on selling that some analysts said may be related to improved pork conditions in China and to lower hog prices here.

On Sunday, a Chinese news agency said pig supplies there had increased in September and pork prices had fallen more than 11 percent.

The increase in supplies and lower pork prices may indicate that China is making headway in recovering from widespread swine disease there, which could lessen the amount it will have to buy from foreign suppliers, analysts said.

"Smithfield was the one (supplier) that was believed to have the only solid inroad into China," said Don Roose, livestock analyst with U.S. Commodities Inc.

In August, Smithfield announced it was in a deal to sell 60 million pounds of pork to China.

At that time analysts had expected there would be more sales of U.S. pork to China.

"The amount of pork bought by China so far has been a disappointment from earlier expectations," Roose said.

Smithfield is the nation's largest hog producer. Many of its hogs are processed in Smithfield plants, but others are sold to other pork companies, and lower hog prices could hurt results.

At the Chicago Mercantile Exchange on Tuesday the October hog futures were down 1.15 cents per pound, or 1.77 percent, at 63.875 cents per pound.

Smithfield shares were down $2.08, or 6.3 percent, at $30.82 late Tuesday afternoon on the New York Stock Exchange. Earlier, they fell as low as $30.33.

(Reporting by Bob Burgdorfer)

((Editing by Gerald E. McCormick; Reuters messaging: bob.burgdorfer.reuters.com@reuters.net; 312-408-8723; bob.burgdorfer@reuters.com)) Keywords: SMITHFIELD SHARES

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