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Smithfield Foods says China looking for pork
2007-07-15
U.S. hog and pork producer Smithfield Foods Inc. (NYSE:SFD) said on Friday China has shown more interest in buying its pork, which probably was the reason the company's shares sped to a two-year high. "I do not know anything about size or timing, but I can say we are in talks with them," Jerry Hostetter, Smithfield's spokesman, said of China. China's interest in buying pork from Smithfield is greater than it has been in the past, said Hostetter. The largest U.S. meat producer Tyson Foods Inc. (NYSE:TSN), said on Friday it also has received interest from China to buy pork although no new deals have been negotiated. "We have not entered into any additional purchase agreements of pork to China, however, an interest has been expressed to us for potential purchases, details are unknown at this point and no further commitments have been made," Tyson said in a statement. Some Chicago hog contracts rose the maximum daily price limit on Thursday amid widespread talk in livestock markets that China was seeking to buy 20,000 metric tons of pork on the world market, some of which could come from the United States. On Friday morning, Smithfield shares jumped to $34.42, their highest level since March 2005. The gains were likely related to talk of China's interest in pork, said Hostetter. China has been buying U.S. pork, but talk in the livestock markets is that it will be buying more to make up for lost production due to hog disease there. "I think it is definitely related to the disease," said Hostetter of China's interest. This year through May, China has bought nearly 18,000 metric tons of U.S. pork, up nearly 52 percent from the year-earlier period, according to U.S. Agriculture Department data released on Thursday. On Thursday, BMO Capital Markets issued a report citing industry sources that said China may be seeking to buy 20,000 metric tons of pork from five countries, including the United States, and may eventually buy up to 100,000 tons. China's growing economy also may be driving it to buy more pork. The economy has produced a middle class population with money to spend. "They have had tremendous economic growth. As people get wealthier they tend to eat meat and pork is the meat of choice," Ron Plain, an agricultural economist at the University of Missouri, said on Thursday. Smithfield produces beef, pork, and turkey, while Tyson produces beef, pork, and chicken. On the New York Stock Exchange, Smithfield's shares closed up $1.14, or 3.54 percent, at $33.36, and Tyson's closed up 35 cents, or 1.49 percent, at $23.91.
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