Global Markets React to Bird Flu Outbreak and Other Agricultural Pressures

Global markets were on edge Thursday as the outbreak of bird flu spread across the globe, with various countries imposing emergency measures to prevent its spread. Meanwhile, other agricultural pressures, including high energy costs and fluctuations in meat and livestock prices, continued to affect farmers and the industry as a whole. As a result, the Chicago Mercantile Exchange lean hog futures closed firm on short covering, spreading, and deep-month speculative bargain hunting.

Key Takeaways:

• The outbreak of bird flu has prompted various countries to impose emergency measures, including banning imports of live birds, eggs, and poultry products, as well as imposing fines on poultry farmers who fail to keep their birds indoors.
• The spread of bird flu has stumped experts because it doesn't match traditional flight patterns for migrating birds, making it harder to predict how the deadly virus will spread.
• High energy costs are expected to continue affecting farmers in 2006, contributing to a decline in net cash farm income, according to the U.S. Department of Agriculture's Chief Economist, Keith Collins.
• The European Union has agreed to boost measures to prevent the spread of bird flu in Europe, including stricter precautionary methods for affected areas.
• The European Medicines Agency has outlined new data requirements for any new bird flu vaccine for birds to be filed for approval, in an effort to fight the growing outbreak of bird flu in the European Union.
• The Chicago Mercantile Exchange will delay listing the March 2007 feeder cattle futures contract, pending changes, but the CME says it hasn't decided anything yet.

Statistics:

• Analysts' average projection for pork belly stocks held in U.S. cold storage warehouses as of Jan. 31 is 62.7 million pounds, based on a 59.9 million to 68.013 million pound range.
• Ham stock projections for last month are 48.2 million to 53.0 million pounds.
• Total pork estimate range is 475.0 million to 480.2 million pounds.
• U.S. meat and poultry per capita production and consumption in 2006 are expected to be record high, leading to lower animal and meat prices.
• Israel has limited its ban on Argentine beef to just one province in the South American nation.

Sources:

• Dow Jones Commodities News via Comtex
• AP (Associated Press)
• EUROPewide Press Release (European Medicines Agency)
• USDA (U.S. Department of Agriculture)
• Senasa (Argentina's animal- and plant-health agency)
• Prime-Tass News Agency (Russia)