A quarterly update on the size of the U.S. hog herd usually draws little attention in Canada. But this Friday's report from the U.S. Department of Agriculture will be closely watched in some agriculture and trading circles for signs that a deadly pig virus is taking a rising toll and reducing the number of pigs headed to slaughter.
Buyers of bacon should take note, as well, because the disease that kills most infected piglets has already sent up prices for hogs traded in Chicago by 47 per cent this year. Food processors, distributors and restaurants are scrambling for pork ahead of the warm weather, also known as barbecue season.
"It's become a panic-driven market," said Dan Norcini, an independent commodity trader in Idaho. "I've been doing this for 25 years and I've never seen anything like this."
Known as porcine epidemic diarrhea (PED), the virus does not affect humans or other animals. It has killed about 6 per cent of the U.S. pig population and has spread to more than two dozen states since being discovered last spring. In Canada, the virus, which is spread through contact with feces, has been found in Quebec, Manitoba and PEI, but has largely been concentrated in Ontario, where it has been reported on 35 farms.
In the United States, large hog processors, including Virginia-based Smithfield Foods Inc. and Hormel Food Corp. of Minnesota, have been scaling back pork production and cutting workers' hours as they face a smaller number of hogs to slaughter and higher input costs. Retail bacon prices tracked by the USDA have climbed by 12 per cent in the past 12 months.
Mr. Norcini warned that prices will rise even higher as peak grilling season coincides with the hog herd's lowest head count. (It takes about six months to raise a piglet to market weight.)
"Consumers are going to say, 'What's going on here?' They ain't seen nothing yet," he said.
Friday's USDA report will show if traders have exaggerated PED's effects on head count and bid up prices too high.
Sows develop an immunity to the virus that they pass on to their offspring, so the damage is expected to be relatively short term. Mr. Norcini noted that hog prices for June, 2015, are priced at a steep discount to this coming June, a sign that the market agrees the virus will abate.
He said another damper on soaring pork prices will likely be consumers, who will stop buying pricey pork ribs and throw a chicken on the grill instead.
In the meantime, high hog prices are welcome news for
Canadian pig farmers, who have endured five years of rising costs and falling sales. But producers whose whose herds catch PED face possible financial ruin.
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