Corn, Soybeans, Wheat Drop as Swine Flu May Cut Animal-Feed Use

April 27 (Bloomberg) -- Soybean prices tumbled the most in two months, and grain futures fell on speculation that a swine- flu outbreak will curb demand for livestock feed and pork.

The World Health Organization will raise its pandemic alert to an unprecedented level today, saying that swine flu is spreading across North America, two people familiar with the agency said. Hog and pork-belly futures plunged 3 cents a pound, the most allowed by the Chicago Mercantile Exchange. Several nations banned pork from Mexico and the U.S.

“A pandemic could slow economic activity, cutting into demand for all commodities, grain included,” Dale Durchholz, a senior market analyst at AgriVisor LLC in Bloomington, Illinois, said in an e-mail. “Some in the grain trade fear this could adversely affect world pork trade, cutting into feed demand.”

Soybean futures for July delivery fell 37 cents, or 3.6 percent, to $9.97 a bushel on the Chicago Board of Trade. The drop was the biggest for a most-active contract since Feb. 17. The price has dropped 25 percent in the past 12 months.

Corn futures for July delivery declined 5 cents, or 1.3 percent, to $3.8075 a bushel. Earlier, the price fell as much as 4.1 percent. The grain has declined 36 percent in the past year.

Wheat futures for July delivery declined 23.75 cents, or 4.4 percent, to $5.195 a bushel, the biggest drop since March 25. The price has slumped 36 percent in the past year on increased global production and waning demand for U.S. grain.

Bird Flu

More than 100 deaths linked to swine flu occurred in Mexico. Cases have been reported in the U.S., Canada, Spain, Mexico and New Zealand.

The virus, normally contagious only among pigs, raised concerns that this outbreak may be similar to the spread of the H5N1 bird flu in Asia during the past few years. That disease killed several hundred people and led to the slaughter of millions of chickens and other poultry.

The bird-flu virus never obtained the ability to spread easily among people, while the swine flu virus that first appeared in Mexico already has acquired that trait, according to Malik Peiris, a microbiologist with the University of Hong Kong. There is no vaccine to protect people from the disease.

“It will probably take at least a couple of weeks before we know the outcome of this disease,” said Dan Basse, the president of AgResource Co. in Chicago.

U.S. Hog Herd

Swine flu is a respiratory disease of pigs caused by type- A influenza that regularly leads to outbreaks among the animals, according to the U.S. Centers for Disease Control and Prevention. Three main human flu strains, H3N2, H1N1 and type B, cause 250,000 to 500,000 deaths a year in seasonal epidemics, according to the WHO. No reports of this virus have been reported in U.S. hog herds, the Department of Agriculture said

Pandemics occur when a novel influenza A-type virus, to which almost no one has natural immunity, emerges and begins spreading.

Consumers have begun to ask supermarkets around the country whether pork can transmit the virus, Ken Goldman, a JPMorgan Chase & Co. analyst, said in a report. Goldman lowered his estimates for Tyson Foods Inc. and Smithfield Foods Inc. earnings this year.

Still, “demand for feed will not be affected except for isolated cases,” Douglas Carper, the principal of Omaha, Nebraska-based DEC Capital Inc., said in an e-mail. “Remember, you don’t get swine flu by eating pork, but rather from being around people affected by swine flu. Furthermore, it is highly treatable.”

China, Russia, Indonesia and the Philippines have blocked imports of pork from Mexico and parts of the U.S. China banned shipments from Texas, California and Kansas, according to the country’s General Administration of Quality Supervision.

Corn is the biggest U.S. crop, valued at $47.4 billion in 2008, followed by soybeans at $27.4 billion, government figures show. Wheat is fourth, behind hay, at $16.6 billion.