Pork prices in the UK and the rest of Europe could be set to rise, as concerns are growing about an aggressive form of pig diarrhoea that is slashing pig numbers in the US.
Porcine Epidemic Diarrhoea Virus (PEDv) has spread rapidly in recent months and now affects about 60% of the US pig breeding herd, leading Rabobank to predict this week that US pork production could decline by up to 7% in 2014 - the biggest decline in over 30 years.
The US and EU are the world’s biggest exporters of pig products, and with less available from the US, European pig producers are set to benefit from new export opportunities, particularly in Asian markets such as mainland China and Hong Kong.
This, in turn, could tighten supplies in the UK and the rest of the EU and cause pig prices to rise, said senior Bpex analyst Stephen Howarth. There were already signs this was starting to happen - European pig prices fell after Russia imposed a trade ban over African swine fever earlier this year, but prices had recently started firming again, he added.
“We’ve seen some recovery driven by stronger demand from export markets in Asia, although it is too early to say if that’s purely in response to the situation in the US.”
The UK pig industry has had export access to mainland China for about 18 months, and last year exported about 25,000 tonnes of pork and about 15,000 tonnes of offal to the country. It was possible the US PEDv crisis in the US could accelerate progress in China for UK pig producers, though this was difficult to quantify, added Howarth. “In any case, it can’t do any harm to our access.”
Some UK producers also exported pork to the US - particularly ribs - but the volumes were small and other EU producers, such as Denmark, were better placed than the UK to ramp up exports to the US, Howarth said.
Meanwhile, the National Pig Association has urged the UK pig sector to be on high alert and step up biosecurity to ensure PEDv does not take hold in the UK pig herd. Concerns about PEDv have been amplified by the fact that it is not yet clear how the virus took hold in the US. “What is clear is that once the virus makes it into a region, it can spread quite easily and rapidly throughout an entire population,” said Rabobank analyst William Sawyer.
Pigs in Mexico have also been hit by PEDv and there are reports the virus is starting to take hold in Canada.
US pig producers who manage to keep their herds clear of PEDv stood to take advantage of high hog prices, but the “real winner” was set to be the US poultry industry, Rabobank said. “With US beef production forecast to decline by nearly 6% in 2014, coupled with Rabobank’s estimate of 6-7% less pork production, this implies an exceptional opportunity for the US chicken industry as the protein of last resort.”