Global implications of PEDv unknown

by Meat&Poultry Staff
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UTRECHT, Netherlands – The outlook for prices in the global pork market is forecast to remain steady through the second quarter of 2014, according to the Rabobank Pork Quarterly Q1 report.

Pork producers' margins are expected to increase on declining feed prices, according to the report. But an unknown variable is the effect of porcine epidemic diarrhea virus (PEDv) on key pork-producing countries. Outbreaks have been reported in the United States, Canada and Mexico. PEDv poses no food-safety risk, but piglets are especially vulnerable to the disease, which kills up to 80 percent of the piglets that contract it. The virus was first detected in US swine herds in mid-May. Canada reported its first confirmed case Jan. 23 in Ontario, the country's main pork producing region; and an outbreak began in Mexico around the third quarter of 2013.

"The main wildcard in the global market this quarter is the effect of PEDv outbreaks in North America and what this means to pork production in and export from this region this year", said Albert Vernooij, Rabobank analyst. "Rabobank expects the impact in the US to be more severe than forecast by the USDA and believes it will likely hamper US pork production growth into 2014. This might also pressure US export volumes, presenting opportunities for the other exporters."

The amount of pork available for export will be limited in the next 12 to 18 months, according to Rabobank. Canada is the third-largest exporter of pork, behind the US and European Union.

But pork producers in Mexico remain optimistic — as long as PEDv is controlled. Despite the threat of the virus spreading, the Mexican government launched a new program to increase the swine herd through genetic improvements and improve pork quality to increase exports, Rabobank noted.

Addressing other markets, Rabobank noted that pork imports to Japan dropped 10.9 percent from January to November on a depreciating Yen while the pork market in Korea has returned to its form before the swine fever outbreak that began in April 2009, according to Rabobank.

Rabobank is forecasting a positive first half in the EU. Farmers' margins are expected to recover on lower feed costs and higher prices for pork following the low prices experienced in the first half of 2013. Slightly higher pork production, strong productivity growth and stable to slightly higher consumption and exports will be supportive of higher margins for farmers, according to Rabobank.

"In the long-term, the main question will be how farmers globally will react to the lower feed costs and the scale of industry expansion that will follow," the Rabobank report noted. "In light of the margin pressure most farmers have endured in recent years, Rabobank expects global pork production growth to be measured and in line with demand. At the same time, steadily growing production in China and Russia and strengthening will limit export growth potential for traditional suppliers."
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READER COMMENTS (1)

By George Camara 1/30/2014 11:01:18 AM
Their is a large geographical error in the article. The PED virus has not been found in Manitoba but in Ontario.