"Bird flu's having a real negative impact on the hog industry in the States right now," said Ronald Plain, an agricultural economics professor at the University of Missouri-Columbia.

"The reason is simply that a lot of the foreign customers of U.S. poultry exports are in places that have had outbreaks of bird flu and the consumption of poultry in those areas is dropping," he told a conference in Winnipeg sponsored by GrainWorld.

U.S. poultry exporters have consequently been forced to sell more of their product in their own country, Plain said. "Our poultry exports are down and that means more chicken on the U.S. market at some very attractive prices from the customers' standpoint and that makes it tougher to get as much pork as we'd like," he said.

Although this could be seen as an opportunity to export more pork, Plain said it is not attractive to pork producers. "From the viewpoint of our farmers, a tough way to gain market share is with cheap product," he said.

Plain expected North American hog carcass values will drop in 2006, while he projected U.S. commercial hog slaughter will increase 1.2 percent to 104.8 million head, from 103.6 million head in 2005. In North America, there are six pork processing plants that have either recently opened or are expected to begin construction in the near future, he said.

"It looks like we're about to add 13 percent to the killing capacity," Plain said. Plain forecast Iowa-Minnesota hog carcass values will drop to $55-$59 per hundredweight in 2006, from $67 in 2005. He forecast Manitoba values in Canada will fall to C$61-C$64 ($54-$56) per hundredweight in 2006, from C$68 ($60). ($1=$1.14 Canadian)

Source: Reuters - 2nd March 2006