Pig virus could cut U.S. output by seven percent in 2014

CHICAGO (Reuters) — A lethal pig virus sweeping across farms in the United States could cut pork production as much as seven percent this year, a far steeper decline than the government has forecast, according to agribusiness research firm Rabobank.

Porcine epidemic diarrhea virus has killed about seven million baby pigs since it was detected a year ago in the United States, where the outbreak has been most severe. It has also appeared in Canada and parts of Asia.

The Rabobank research note estimated there would be a six percent to seven percent drop in 2014 U.S. pork production tied to losses from the virus. The USDA had said PED could reduce output by two percent.

The United States is the world’s largest pork exporter with 4.992 billion lbs shipped in 2013, down from a record 5.381 billion lbs the previous year, according to the U.S. Department of Agriculture.

On Tuesday, the European Union addressed worries that this virulent strain could make its way to Europe next, announcing new rules aimed at ensuring imported pig blood used in animal feed was free of the virus.

The USDA has only recently required producers to report the disease, making it hard to tally the official impact on the industry.

Tyson Foods Inc., the country’s top meat packer, expects a decline of as much as four percent in U.S. pork production for the year, partially offset by heavier hog weights, it said on Monday.

On Monday, Tyson reported second-quarter pork sales rose about 13 percent to $1.49 billion, ignited by higher prices.

“(PED) has been the driving force pushing up pork prices, especially in the U.S., to record highs,” said Rabobank analyst Albert Vernooij in the note.

“U.S. futures climbed 30 percent in Q1 and are up 45 percent over last year, impacting pork users and consumer’s ability to source enough pork for their needs,” he said.

Rabobank thinks hog losses pegged to PED in the United States, Mexico, Japan and South Korea could lead to a shortage in global pork production in 2014, rather than a 1.3 percent increase it had previously estimated.

But the current stress on global pork supplies is being eased by a supply glut in China, the world’s largest producer and consumer of pork, Rabobank said.

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