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Pork to Rise in Japan as Deadly Virus Hits Largest Producers

April 7, 2014
05 04 12 Hogs
  
 
 

The most deadly outbreak of a hog virus in 18 years in Japan is raising pork prices and may boost imports from the biggest buyer, supporting a record rally in Chicago.

The Agriculture Ministry has discovered 186,825 cases of porcine epidemic diarrhea in 251 farms in 19 prefectures since it confirmed the latest outbreak of the contagious disease in October. As many as 39,285 pigs have died, the highest number of fatalities since 1996, Tomoyuki Takeshita at the ministry’s animal health division, said today.

The U.S., Canada, South Korea and Taiwan have also reported outbreaks. More than 5,000 cases have been reported in the U.S., according to the National Animal Health Laboratory Network. American pork production may drop by the most in three decades this year, Rabobank International estimates. Futures climbed 49 percent last quarter, the biggest rally in 15 years, as the virus threatened U.S. production.

"The disease will start having an impact on pork supply from around June as it spread to Kagoshima and Miyazaki prefectures in December, and pigs become ready for slaughter after six months," said Akio Tamai, a pork and beef markets researcher at Agriculture & Livestock Industries Corp. in Tokyo.

Hog futures for June settlement gained 0.2 percent to $1.208 a pound at 9:50 a.m. on the Chicago Mercantile Exchange. Prices reached a record $1.33425 March 18. The virus has increased costs for hog-farm operators such as Smithfield Foods Inc. and Maschhoffs LCC.

Wholesale prices of pork carcasses traded on markets across Japan jumped 17 percent to 484 yen a kilogram ($2.13 a pound) on average in February from a year earlier, data compiled by the ministry showed. Prices in Tokyo gained 2.2 percent to 519 yen a kilogram on average on April 4 from a day earlier.

 

Meat Packers

 

Prices in Japan will probably extend gains for the next six months, boosting costs for meat processors including Nippon Meat Packers Inc., as the piglet-killing illness shows no signs of abating and will worsen a seasonal decrease in supply during summer, according to Agriculture & Livestock Industries Corp.

Kagoshima is Japan’s biggest pork-producing prefecture, representing 14 percent of the total Japanese herd. Miyazaki is the second-largest producer with 8.7 percent share, according to the ministry.

The first case in the current outbreak was found in the southern island of Okinawa on Oct. 1. Kagoshima has confirmed 153,000 cases of the disease, or 82 percent of the total.

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