Bird flu worries began to infect the commodity markets Tuesday after the news spread that an Iowa egg-laying operation would need to destroy millions of hens due to the virus.
“When 3.8 million birds go down in one day, that’s significant,” said Mark Gold, managing partner of Top Third Ag Marketing, reviewing Tuesday's market movements in grains, soy, cattle, and hogs. “And it happened in a state that is the country’s biggest egg producer.”
As recently as Monday, an Associated Press story outlined the strategies being used by Iowa to keep the H5N2 virus away from their egg-laying operations.
H5N2 on the Farm
The Iowa development represents a new stage in the avian influenza outbreak, which so far had been concentrated at turkey farms in the Midwest. So far, 6.7 million birds--turkeys and chickens--have been killed.
“We are experiencing significant challenges in our turkey supply chain due to the recent (H5N2) outbreaks in Minnesota and Wisconsin,” Jeffrey M. Ettinger, president and CEO of Hormel Foods, said in a statement Monday. According to the company, the virus has been “detected at multiple turkey farms that supply Jennie-O Turkey Store,” which has resulted in flock losses and downtime for disinfection.
Unfortunately, biosecurity methods appear to only go so far with this strain of bird flu, which experts believe is spread by wild birds.
“When you’re dealing with a contaminated environment—like we’re talking about, with the spread of the virus through wild waterfowl populations—it makes it very hard,” said Dr. John Clifford, chief veterinary offier for the USDA and the Animal Plant Health Inspection Service (APHIS) on AgriTalk Tuesday.
At the same time, poultry producers who shrug off biosecurity could end up spreading the disease to their own flocks.
“You have to look at all possibilities whether its trucks, personnel, or people coming on and off a facility, and you really can’t have any breaks at all in those with regards to cleaning and disinfecting trucks and personnel,” Clifford said. “You have to consider all the outdoor area as a potential contaminated area.”
Listen to Clifford's full comments here:
All those concerns—and unknowns—are beginning to affect the commodity markets.
With the outbreak causing bans of U.S. poultry exports to some countries and poultry production potentially down, beef and pork futures moved up on Tuesday.
“We’re seeing strength in the cattle and hog markets, either because of higher prices (for poultry) or lower demand” as consumers choose beef or pork over chicken, according to Gold of Top Third Ag Marketing.
The grain and soy markets went the other direction Tuesday. Prices for May corn futures slipped 5 cents to $3.73. Soybean meal, which is a protein source in chicken feed, also dropped, falling $2.70 to $315.80 for May futures.
Could the loss of all those chicken and turkeys result in lower demand for corn and soybeans? Maybe, maybe not. “Industry estimates suggest that a 5% decline in poultry reduces corn demand by 75 million bushels, but losses thus far are less than 1%,” according to Water Street Solutions in Peoria, Ill.
Given those numbers, Gold said it may be “premature” to predict whether avian influenza could reduce feed demand in quantities large enough to affect the grain and soy markets.
“But at what point does it make a difference?” he said. “Obviously the market is very concerned right how—corn’s down, meal’s down. I think the reason we’re down is because pressure is coming from the shock of 3.8 million birds being killed out here.”
Has your area seen an outbreak of avian influenza? What concerns do you have about this virus and its potential impact on U.S. agriculture? Let us know on the AgWeb discussion boards.