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Hog futures go up on supply woes as pig virus spreads

By Bloomberg News

CHICAGO — Hog futures rose to a record, joining this month’s cattle rally to an all-time high, as supply concerns mounted amid a spreading virus that kills piglets and signs that U.S. pork output is declining.

Porcine epidemic virus, or PED, has killed more than 4 million pigs in the U.S., according to the National Pork Producers Council. As of Feb. 22, 16.3 million hogs were slaughtered in 2014, down 2.7 percent from a year earlier, government data show.

Through Thursday, hogs jumped 22 percent in 2014, the second-biggest gain among 24 raw materials in the Standard & Poor’s GSCI Spot Index. Demand for pork has increased as beef costs climbed. U.S. consumers will pay as much as 3.5 percent more for meat this year, compared with a 1.2 percent advance in 2013, the government has forecast.

The slaughter “tends to decline all the way into summer,” Dan Vaught, an economist with Doane Agricultural Services Co. in St. Louis, said in a telephone interview. “The PED virus, whether or not it’s having an impact now, is certainly expected to.”

Global AgriTrends, a Denver-based research company, has said the PED virus may kill as many as 5 million pigs, or about 4.5 percent of the animals sent to processing plants last year in the U.S., the world’s biggest pork exporter.

The market “is looking at two issues: the seasonal decline in slaughter, which starts in April, and the trade has a very clear expectation that PED will be a March or April issue, not just a summer issue,” Rich Nelson, the director of research at Allendale Inc. in McHenry, Ill., said Thursday in a telephone interview.