NEW YORK – Rabobank is forecasting that porcine epidemic diarrhea virus (P.E.D.v.) will have “significant impacts” on pork production and slaughter through 2015.
“In the U.S., we see the outbreak of P.E.D.v. 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,” said William Sawyer, an analyst for Rabobank. “Given the ever rising number of P.E.D.v. cases reported, coupled with a six-month average lifecycle, the months of August through October are likely to be the tightest for processors, where slaughter could decline by 15% to 25% against 2013 levels. If the virus continues at its current rate, the shortfall to U.S. slaughter in 2014 could be as much as 15 million hogs.”
With regard to productivity, 2014 will be a story of the haves and have-nots, where hog producers who experienced mild cases of P.E.D.v., or none at all, may realize margins of more than $60 per head, the highest calendar year average seen in Rabobank's 40-year record. Conversely, hog producers who have had difficulty eradicating the virus may suffer significant losses as the pain of the high fixed costs of modern hog production compounds prolonged periods of weak productivity.