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DAVID KRUSE

By Staff | May 8, 2009

The Centers for Disease Control and Prevention in Atlanta said that there has been no evidence of swine flu in the hog population in the U.S. or that the virus had originated with any swine.

Dr. Patricia Quinlisk, state epidemiologist, said swine flu can be caught by handling hogs. But she said there’s no evidence that the Americans who have come down with the disease caught it that way.

All cases of swine flu contracted by Americans were thought to have been acquired by travelers in Mexico and brought to the U.S. Cancun resorts are going to take a hit. You can get a great deal on a vacation to Mexico right now. Bet they will even throw in a free case of Tamiflu.

The CDC stated, “Swine influenza viruses are not spread by food. You cannot get swine influenza from eating pork or pork products.

“Eating properly handled and cooked pork products is safe.” That’s not to minimize the seriousness of the disease with confirmed deaths in Mexico. The first number was 22 then 81, later the wire service said 103 dead in Mexico. That change was in just a 24-hour period.

The current total is much higher. The World Bank is loaning Mexico over $200 million to deal with the health crisis. The Mexican Health Minister says they “are on top of the situation.” Even I don’t believe that one.

Anti-CAFO activists are using the swine flu epidemic to hand out garbage depicting swine CAFOs as flu factories. This is irresponsible, but it’s what to be expected from them.

Those looking for some panic will find it as public officials issue warnings that will disrupt travel, discourage people-to-people contact, as well as closing schools. Markets will be disrupted.

Mexico has been a prime export market for U.S. pork, a large ham buyer. Export demand was already weakening this year because of the weak economy and this swine flu outbreak will only make it worse.

Typically into spring, the cash hog market is lower than summer futures but seasonally rallies to align the basis. Not this year.

Hog slaughter has dropped over five percent and pork demand weakened to match the reduction in supply so that no market strength materialized.

Swine flu is taking the seasonal premium out of hog futures, pulling the futures market down in line with cash. This washout should soon set a major bottom in the hog market. The bearish market reaction to swine flu should finish five waves down in the bear market in hogs from the August 08 high.

Ideally, we should get another small bounce for wave 4 of 5 and another marginal new low below the current low for wave 5 of 5.

Swine flu should be the bad news that finishes off a significant bottom in the hog market.

They have been trying to pin the source of swine flu in Mexico on one of Smithfield Food’s hog units near La Gloria, but they can’t connect the dots. A 4-year-old boy there was one of the earliest cases, but they didn’t find any pigs with the flu.

Mexican authorities have yet to confirm the disease in any swine. It’s all from people-to-people contagion.

A Purdue veterinarian explained that, “Flu viruses are named after the first animal they were found in. This particular strain just happened to be discovered in pigs in 1930, and this is the only reason it’s called swine flu. We don’t even know if the virus found in humans will infect pigs. At this point, the new H1N1 virus has not been found in the U.S. pig population.”

I think a lot of people who don’t like Smithfield Foods would love to pin that flu outbreak on them. They call the flu, swine flu, but so far, they haven’t found a sick pig anywhere, just sick people. Smithfield Foods says, “We are very comfortable that our pork is safe. We don’t have any reason to believe that this has anything to do with Smithfield at all.”

The way the disease has spread, it is highly contagious. Theories as to how the virus jumped to humans may never be confirmed. A WHO health expert conjectured that, “It’s possible someone tending the pigs could have passed a human influenza virus to a pig already infected with another type of swine flu and then that pig could have also come into contact with a bird virus. Then, the new H1N1 virus formed could have been transmitted back to the workers.”

In other words, the disease may have started in people, not swine, and pigs should be more afraid of humans than the other way around.

The hog industry would much prefer that the disease scientists use another name for the swine flu, but has gotten no cooperation from authorities. I don’t think most U.S. consumers will make the mistake of linking swine flu and pork, but I’m not as confident that will be the case in Mexico and elsewhere.

Mexico took over 24 percent of U.S. pork exports in January and February Mexican pork demand growth was making up for declining sales to Russia and China.

Mexico also takes a large amount of pork variety meats that don’t have much value to U.S. consumers. Nobody in the U.S. hog industry has been able to make a profit despite a 5 percent decline in hog numbers and feed prices having moderated because of weak demand. The loss of pork exports expected as a result of the flu epidemic in Mexico will sustain industry losses.

Nearby LH futures are deflating to the level of the cash market. The pork complex has to absorb the impact of swine flu.

David Kruse is president of CommStock Investments Inc., author and producer of The CommStock Report, an ag commentary and market analysis available daily by radio and by subscription on DTN/FarmDayta and the Internet.

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