May 22, 2014 / 10:03 PM / 4 years ago

U.S. April pork stocks shrink from last year as pig virus hits

CHICAGO, May 22 (Reuters) - The amount of pork in U.S. cold storage warehouses in April dropped 17 percent from a year ago, according to the U.S. Department of Agriculture’s monthly cold storage report on Thursday.

Analysts in part attributed the withdrawal to processors and retailers pulling product from warehouses to augment a shortage of available fresh pork pegged to the deadly Porcine Epidemic Diarrhea virus (PEDv).

They also point out last month’s pork stock’s result appeared smaller when compared to the record-high April 2013 amount.

Thursday’s USDA report showed April total pork inventories at 584.1 million lbs, up 8.6 million from March but down 116.9 million from April last year.

Pork inventories typically build from March to April as processors and retailers stock up in preparation for late-spring and summer demand for backyard cookouts, said analysts.

Still, the increase came as a surprise given the 4 percent drop in hog slaughter so far this year, while pork output slipped only 1 percent.

In April, packers relied on heavier hogs to help soften the blow from PEDv that claimed an estimated 7 million pigs since it was first detected in the United States a year ago.

“Even with higher weights hogs to offset the loss of production from the virus, we still had a net drop in pork production at that time,” said Illinois-based Allendale Inc. chief strategist Rich Nelson.

Bob Brown, an independent market analyst in Edmond, Oklahoma, was also caught off guard by the month-over-month rise in pork stocks. He anticipated a drawdown based on record-high pork costs, particularly for bellies and trimmings, that were not conducive for storage.

“All the pork prices came down during the month, but remained historically high,” said Brown.

Last month’s pork stocks declined from a year ago because the huge run up in pork prices gave end-users the opportunity to take product out of freezers, he said.

Nelson and Brown agreed that the April storage increase from the month before may have bearish implications for Chicago Mercantile Exchange hog futures.

Those hog contracts on Thursday had fallen hard in response to lower prices for market-ready hogs and pork at wholesale.

CME hogs for June delivery closed 2.325 cents per lb lower at 117.600 cents. (Editing by Grant McCool)

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