Friday, March 11, 2011

Japan quake rattles US ag markets

From the Wall Street Journal:

A severe earthquake and tsunami in Japan rattled U.S. agricultural markets Friday, as traders tried to assess the potential impact on import demand for such commodities as pork and corn.

Corn and lean hog futures saw some of the sharpest declines as most farm products sold off on fears the disaster would slow demand from a key buyer. Further selling came from traders looking to just exit commodity markets because of the overall uncertainty that follows a natural disaster.

"The immediate impact of the earthquake was extreme uncertainty -- the condition most hated by investors," said Bryce Knorr, analyst for Farm Futures, an agricultural publication.

Avoiding the broad sell-off was lumber, with futures for May delivery climbing $6.40, or 2.1%, to $315.50 per 1,000 board feet on the Chicago Mercantile Exchange. Futures rose $10 in overnight trading, the largest one-day gain allowed under exchange rules. [...]

Hog futures sold off with the April contract, which is the most actively traded, recently falling one cent, or 1.1%, to 88.85 cents a pound. June hog futures were off 1.6 cents, or 1.6%, at 99.85 cents a pound.

Japan is the largest international customer for U.S. pork based on total sales, with the country spending nearly $1.65 billion on imports in 2010 and accounting for more than 34% of total U.S. export sales, according to data from the U.S. Department of Agriculture and U.S. Meat Export Federation.

It is too early to assess the overall damage, yet in the short term "it appears there will be significant disruption to transportation," said Jim Herlihy, a spokesman for the export federation.

Delays of meat shipments from the U.S. may occur, which could temporarily put more pork supplies into the domestic market.

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