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Russia says needs more guarantees to allow U.S. pork imports

Source: Reuters - Tue, 4 Mar 2014 19:44 GMT
Author: Reuters
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(Adds impact on Chicago hog futures, analyst and trader comments)

MOSCOW, March 4 (Reuters) - Russia needs more guarantees on food safety from two U.S. pork packing plants in order to resume imports from the United States around March 10 as it had originally targeted, Russia's veterinary and phytosanitary watchdog (VPSS) said on Tuesday.

"Imports from these two plants will be resumed as soon as the issue with refrigerators, from which supplies are due to come, is resolved," VPSS spokesman Alexei Alekseenko said.

"I can't say if it's going to happen before March 10, it depends on the U.S. side," he added.

The plants in question are two subsidiaries of U.S. producer Smithfield Foods Inc, which was bought by China's Shuanghui International Holdings last year.

Russia banned most meat imports from the United States in February 2013 because of concerns over the use of the feed additive ractopamine. The country previously planned to resume pork imports from the United States from around March 10. [ID:

Russian news agencies reported earlier on Tuesday that the request by VPSS for more guarantees meant that Russia had put its decision on U.S. pork imports on hold.

Alekseenko said that their interpretation was wrong.

"We still plan to allow pork imports from two Smithfield firms. This list can be broaden in future," he said.

Smithfield Foods could not immediately be reached for comment on Tuesday.

Russia's decision to use military forces in Ukraine's Crimea region has drawn strong criticism from Western leaders including U.S. President Barack Obama who said on Monday that the U.S. government would look at economic and diplomatic sanctions to isolate Moscow.

Word of potential delays in resuming U.S. pork exports to Russia initially pressured Chicago Mercantile Exchange hog contracts on Tuesday.

Hog futures quickly rallied in anticipation of tight supplies tied to the spread of the deadly Porcine Epidemic Diarrhea virus (PEDv) on U.S. hog farms.

CME hogs for April delivery closed up their 3-cent per lb daily price limit at 111.675 cents.

Early-session selling reflected some measure of investor uneasiness about the U.S. export situation with Russia, said Rich Nelson, chief strategist with Allendale Inc in McHenry, Illinois.

Traders were also concerned about additional Russian restrictions given talk of possible sanctions by the United States that could come within days, not weeks, he said.

"This is all 100 percent politically motivated on the part of Russia," said Nelson.

He attributed futures' subsequent rebound to U.S. domestic hog supply issues driven by the PEDv outbreak that is roiling the U.S. pork industry. The disease is fatal to baby pigs and is expected to reduce U.S. hog numbers beginning this spring and through the rest of the year.

There is no official count of PEDv pig mortality. But analysts and traders have estimated that at least 4 million pigs may have died from the disease, which does not affect humans and is not a food safety risk.

Dennis Smith, a broker with Chicago-based Archer Financial Services, expects Russia will buy pork from the United States after ironing out its differences over the Ukraine issue.

"The purchases ultimately will benefit U.S. pork producers, in that we're going to be shipping pork to Russia sometime in March," he said.

(Reporting by Polina Devitt in Moscow; additional reporting by Theopolis Waters in Chicago; editing by Jason Neely and Matthew Lewis)

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