SFD related news. US govt to buy $30 mln of pork to boost markets
September 09, 2002 10:30:00 AM ET
WASHINGTON, Sept 9 (Reuters) - The U.S. government will buy $30 million worth of pork for use in the federal school lunch program in hopes of boosting beleaguered hog markets, Agriculture Secretary Ann Veneman said on Monday.
The purchase was far larger than usual, U.S. Agriculture Department aides said. Veneman did not rule out additional purchases.
"Pork producers have been suffering from lower prices," Veneman told reporters after addressing members of the National Farmers Union. "I can't say we are counting in or out additional purchases."
The purchase would equal roughly 30-40 million pounds of pork. Pork production in the third quarter of this year was forecast for 4.8 billion pounds.
News of the USDA purchase was expected to raise hog prices when markets opened on Monday, Chicago livestock analysts said. Hog futures traded on the Chicago Mercantile Exchange last week dropped to the lowest level in three and one-half years.
A prolonged drought in the U.S. Plains states has parched crops and forced many cattle ranchers to take their livestock to slaughter earlier than planned. The interruption of American poultry exports to Russia has also contributed to growing supplies of beef, pork and chicken.
The USDA recently forecast hog prices paid to farmers in the fourth quarter of this year would average in the high $20s per pound.
USDA Chief Economist Keith Collins told reporters the government's $30 million purchase of pork would have a "positive but moderate" impact on the U.S. hog market.
"We are doing our best to help a market that is fundamentally a market-oriented market," Collins said. "We can influence it on the margins, at best."
Collins said he expected a downturn in U.S. cattle production in the fourth quarter of 2002. The number of cattle being placed on feed was down, he said, reflecting a depleted cattle inventory and producers' desire to hold out for higher prices.
In July, Smithfield Foods Inc. (SFD), the nation's biggest hog producers, reported a nearly 80 percent drop in quarterly profits due to low hog prices.
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