There’s a new swine disease that could end up affecting our pocketbooks.
Pork farmers are battling PED-V, which stands for Porcine Epidemic Diarrhea Virus, with
losses of baby pigs. No one is sure just how big the losses will reduce slaughter supplies this
spring and summer and for the remainder of 2014, but there is lots of concern in the country.
If futures prices are any indication, you might want to buy pork now and put it in your freezer. In
the past two weeks, April lean hog futures have risen by $10.68 and June futures have risen by
$6.10 to record highs.
Chris Hurt, Extension Economist with Purdue University, thinks there’s a chance market
participants may have over anticipated the magnitude of losses. However, no one will really
know until we know for sure how many baby pigs are affected.
“So far this year, the number of animals coming to market has been very close to the number
indicated by the USDA December Hogs and Pigs report,” said Hurt. “Year-to-date hog prices
have been close to those in the same period in 2013.”
It’s the futures market that’s betting on shorter supplies, which typically mean corresponding
higher prices at the supermarket. Projected lean hog prices for March through July period
suggest prices averaging near $105 per hundredweight, compared to $86 for the same period one
year ago. That would represent a 7 to 10 percent drop in hog slaughter supplies.
When compared to the December USDA report, the 7 to 10 percent drop anticipates that many of
the very young pigs that were in inventory December 1 ultimately died due to PED-V.
“The impact of PED-V is thought to intensify in cold weather so the loss of baby pigs could be
higher than 2 percent during the period of November 2013 to March 2014,” said Hurt. “No one
knows the impact on a national basis, but lean hog futures participants may be expecting losses
to be as high as 7 to 10 percent.”
“Great uncertainty continues for the size of the spring pig crop,” he adds.
The great uncertainties will eventually get resolved in the marketplace – and the grocery stores.
For pork producers at the farm level, current futures markets suggest a live price for 2014 at a
record high of $73 per hundredweight compared to $64 last year. That will provide record high
industry revenues and the highest profit per head since 2005.
Consumers may stand to lose the most from the PED-V as supplies of pork tighten and retail
prices increase.
My advice? Put some pork in your freezer now.
