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Virus killing 5 million pigs spurs hog-price rally

By Elizabeth Campbell and Liyan Chen

Bloomberg News

CHICAGO — Almost every piglet born on Craig Rowles’ hog farms near Carroll, Iowa, died from the virus that swept through his herds in November, causing $462,000 of lost revenue in the first month of the outbreak. By the end of February, he expects to lose 15,000 animals, or 10 percent of annual sales.

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“This virus is one of the most infectious diseases I’ve ever seen,” said Rowles, 56, who started raising livestock as a teenager and earned a degree in veterinary medicine at Iowa State University in Ames.

Porcine epidemic diarrhea virus, called PED, has spread to 23 states since April, with a surge in reported cases last month, including in Iowa, the top producer. Researcher Global AgriTrends said the sickness may kill as many as 5 million pigs, or about 4.5 percent of the animals sent to processing plants last year in the United States, the world’s biggest pork exporter.

Farmers that were expected to increase hog output because of lower feed costs instead will see the virus “constrain supply for most of 2014,” sending Chicago hog futures surging as much as 16 percent this year to $1.10 a pound, the highest since April 2011, said Will Sawyer, a vice president at Rabobank International in New York. The rally may extend gains in meat costs for buyers including Hormel Foods and Hillshire Brands even as overall food expenses have dropped.

While PED poses no threat to humans or food supplies, it can be 100 percent fatal for newborn pigs under three weeks old and prevents older hogs from gaining weight, delaying their arrival at slaughtering plants.

Infected animals get acute diarrhea and vomiting, and the virus can be transmitted from the waste to other pigs, according to the American Association of Swine Veterinarians.

There is no vaccine for the virus, which was common in Europe and Asia but wasn’t seen in U.S. herds until last year, according to the U.S. Department of Agriculture. Farmers are forced to allow the sickness to run its course and to clean out pens to prevent further spread.

Hogs available to processors this year probably will drop about 3 percent, with heavier animals offsetting some of the decline, according to Tyson Foods Inc., the second-largest U.S. pork producer.

That’s a change from November, when the Springdale, Ark.-based company said supplies would climb as much as 2 percent in the 12 months through September 2014.

Wholesale-pork prices will increase in 2014, with the impact most visible in the summer, James Lochner, Tyson’s chief operating offi cer, said on a Jan. 31 conference call with analysts. Tyson doesn’t “anticipate any issues” at its processing plants, he said.

Smithfield Foods, a unit of China’s Shuanghui International Holdings and the largest U.S. processor, said in December that PED may affect 500,000 to 1 million sows across the industry.

That would mean a production loss to the industry of 2 million to 3 million pigs, Robert Manly, the chief synergy officer, said during a Dec. 23 earnings call.