Fears that Russia will cut imports of U.S. pork and poultry impacted livestock markets on Wednesday. The reductions, discussed earlier by U.S. poultry industry officials and Russian authorities, now appear to be on a fast track. Rising debate over Moscow's intervention in Georgia has led to increased tension between the U.S. and Russia.
The possible reductions seemed to catch the market by surprise. Most hog futures declined the permissible 300 point daily limit and cattle futures also were down sharply on concern than lower prices for competing meats would pressure beef prices.
Russia has become a key market for U.S. meat products in recent years. It’s too early to predict the impact a reduction in Russian purchases of U.S. pork and poultry products will have on markets. There is a fear that a significant decline in poultry exports to that country would depress prices for dark meats at a time when the industry is already pressured by high feed costs and negative margins.
USDA currently estimates 2008 U.S. pork exports to reach 5.4 billion pounds, or 23% of overall U.S. pork production. If the Russian action is swift and dramatic, it could remove about 80-100 million pounds from projected Q4 exports. It’s a significant number considering the industry is expecting a record slaughter this fall.