Rabobank’s Food & Agribusiness Research and Advisory group is forecasting more challenging times ahead for the U.S. pork industry. The spread of porcine epidemic diarrhea virus (PEDv) in the United States and in other parts of the world “will have a material impact on pork supply both this summer and in the years to come,” the group said in its Pork Quarterly report.
“PEDv has been the driving force pushing up pork prices, especially in the U.S., to record highs,” said Albert Vernooij, an analyst with Rabobank. “U.S. futures climbed 30% in Q1 and are up 45% over last year, impacting pork users and consumers’ ability to source enough pork for their needs.”
In the United States, where Rabobank said the impact of the virus has been most severe, the advisory group is forecasting production will decline 6% to 7%. The virus also has been identified in Mexico, Japan, Canada and South Korea, and likely will lead to a global production decline. Global pork production was forecast to rise 1.3% this year.
On May 5, while discussing his company’s third-quarter financial results, Donnie Smith, chief executive officer of Tyson Foods, Inc., said the company expects hog production to decline 4% this year.
“The impact of PED is expected to further affect our hog supplies beginning around the first of June, peaking in August and then beginning to ease in October,” Mr. Smith said. “Hog weights are expected to be higher and offset some of the head reduction, so we anticipate industry pork production to be down as much as 4% for the year. We’ll need to adjust our operating hours accordingly, but we think the Pork segment will still perform well this year despite these challenges.”
Michael McCain, president and c.e.o. of Maple Leaf Foods, Inc., Toronto, said on May 1, in answer to an analyst’s question while discussing his company’s latest financial results, that Maple Leaf has yet to feel an impact from the virus in Canada.
“The U.S. industry, by and large, has not done a great job of containing the virus, which is reflective of the — its spread throughout the countryside there. There’s a wide variation of what the impact will be in the hog herd in the U.S., a very wide variation, which I think is a reflection of the fact that there’s a lot of just unpredictability.
“The Canadian market, on the other hand, I think has done a pretty remarkable job to date of protecting itself in bio-security. The Ontario region has had quite a few positive results in PED virus, so maybe that’s a little less successful, but certainly still nowhere near the United States. But, Manitoba has only had less than a handful of positive results in a very isolated location …
“Having said that, the risk is, is that this is a highly virulent virus that, for instance, has, I’ve been told by some scientists, has the capacity to travel even by air up to 16 kilometers. So, it’s quite virulent, and it’s a risk factor in front of us. But, to date, it hasn’t impacted us.”
While pork processors like Tyson Foods and Maple Leaf Foods deal with the ramifications of the virus on the North American hog herd, researchers are attempting to develop vaccine, but have yet to find success.
“I’m not aware of any vaccine that has been developed,” Mr. Smith said. “I do know in working with our pork suppliers, we have a very close, very good relationship with the farmers from which we purchase hogs, and there’s been a noticeable increase in biosecurity throughout the areas where we draw our hogs from. But as far as we know, there’s no readily-available vaccine.”
