- Rabobank Group says the Porcine Epidemic Diarrhea Virus (PEDv) will cause significant two-year shortfalls in the North American hog market.
- U.S. pork production is expected to decline 6% to 7% in 2014, representing the largest drop in over 30 years, though it could be even worse.
- The firm’s Food & Agribusiness Research and Advisory team reports PEDv has already affected 60% of the U.S. breeding herd and 28% of the Mexican breeding herd, and it is making its way to Canada. If PEDv spreads at a similar rate in Mexico and Canada as in the U.S., North American hog slaughter could decline by as much as 12.5% over last year's levels.
Rabobank Analyst William Sawyer explained: “In the U.S., we see the outbreak of PEDv causing a significant shortfall in the availability of market hogs in 2014 – to the tune of 12.5 million hogs or 11% of annual slaughter.” As the number of PEDv cases continues to rise, it is possible that "slaughter could decline by 15% - 25% against 2013 levels" from August through October, and by the end of the year, "the shortfall" can amount to "15 million hogs.”
The shortfall will translate into a story of “the haves and have-nots.” The hog producers who escape the brunt of PEDv will be able to command the highest profits in Rabobank's 40- year record. Those who have been struck by the full impact of the virus, though, will suffer tremendous losses.
Other winners will be those who offer alternative meats, particularly poultry. As American beef production is predicted to fall by close to 6% this year, people will likely turn to chicken, and Rabobank anticipates higher poultry prices and profit margins in the spring and summer.