Cost of pork heading up because of virus that doesn't threaten humans

The most recent U.S. Department of Agriculture data showed average retail prices reached record highs of $5.91 per pound for beef and $4.10 per pound for pork in May, said Chris Hurt, an agricultural economist at Purdue University.

The USDA had the average price of chicken is much lower, at $1.95 per pound, but there is no inexpensive substitute price-sensitive consumers “can turn to in the red meat category,” he said.

“If I want a steak or a pork chop to put on the grill, probably people are turning to a pork chop,” Hurt said.

Indiana’s agricultural sector — which produces much more pork than beef — has benefited from the impact over a number of years of drought that reduced beef cattle herds in states with more ranches.

In addition to U.S. consumers switching from beef, demand for pork also increased as a result of increased purchasing from foreign markets, which bought more of it in anticipation of a tightening supply.

Supplies tightened further as a result of the porcine epidemic diarrhea virus (PEDv), a digestive tract issue that can kill baby pigs without the defense mechanisms adult pigs have to survive it.

A map tracking the spread of the virus, based on voluntary reports to the Indiana State Board of Animal Health, showed it had reached 47 counties in the state by April.

In northeast Indiana, those counties included Elkhart, LaGrange, Kosciusko, Noble, Wabash, Wells and Whitley counties. Denise Derrer, a spokeswoman for the board, said it stopped updating the map when it learned the USDA would start its own program to deal with PEDv. The agency started making reporting of the virus mandatory early last month.

“If you looked at a map of Indiana where these commercial hogs are produced, it very much reflected what our PED map was showing,” she said. “It’s very much distributed throughout the state. Where the commercial hog production is, there is PED.”

“The USDA just recently announced the approval for a vaccine. We haven’t heard a lot of feedback on how that’s working in the field. There have been a lot of folks waiting to see … if it’s effective or not,” Derrer said.

Northeast Indiana’s experience with the virus is pretty typical for the pork producing areas of the state, said Jeffrey Harker a Swine Health Services veterinarian in Frankfort who serves clients in northeast Indiana. He stays in touch with veterinarians throughout the state through the Indiana Swine Veterinary Interest Group.

“The northeast corner of the state is gaining — there’s more and more pigs up there — but more of them are finishing farms,” he said. “The virus mainly affects newborn piglets … and there are less sows probably in that corner of the state so that would mean there are less newborn piglets affectable. There doesn’t seem to be a whole lot of major regional difference at this point; everybody’s been affected.”

As the weather warmed, the PEDv death rate per litter in Indiana fell to 5 percent in May from a peak of 8 percent in late February and early March, when news coverage on the virus and its spreading contributed to increased purchasing of U.S. pork by foreign markets.

“We have seen reaction from producers,” Hurt said. “Hog prices are at record high levels this summer and had been in the spring as well. Producers responded by increasing the market weight. During the first half of the year the number of hogs coming to market was down 4 percent but the weight they were marketed at was up 3 percent and pork supplies were only down 1 percent.”

“Pork supplies were down 1 percent but prices of hogs were up nearly 25 percent and that’s a really big price increase relative to a fairly small change in the supply,” he said. “That tends to say there must also be pretty strong demand. Exports are up about 10 percent on pork so far.”

Live hog prices reached a record average of close to $80 per hundredweight during the first half of the year.

Hurt predicted farmers would not be able to come as close to meeting demand for pork by getting more weight on their hogs in July, August, September and October, and during that period pork supplies would be down around 8 percent.

Producer profits that reached a record average near $70 per head during the second quarter are projected to exceed $90 per head this summer.

Pork producers have indicated to the USDA “farrowings will be pretty much unchanged this summer and they’re intending this fall to increase farrowing about 4 percent,” Hurt said.

“If they do expand farrowings in the fall, that will come to market in the spring and summer of 2015. By the second half of 2015, pork producers will get more pork to the meat case.”

Lean hog futures closed July 15, the most recent close before publishing, at $130.73 centum weight, or per 100 pounds, for August, an increase of 38 cents, according to the NYMEX. The futures price remained above $100/cwt into December.