With porcine epidemic diarrhea (PEDV) in many countries across the world, USMEF has gathered information on how the disease is affecting domestic hog production and pork supplies in these markets. This week we examine the impact in Mexico and South Korea.
Obtaining reliable information regarding PEDV in Mexico is difficult, as it is not a reportable disease and regulatory agencies have released few details about the impact of PEDV on domestic pork production. According to Rabobank, Mexico’s hog slaughter and pork production will decline 7.5 percent and 9.7 percent, respectively, in 2014 with a further decline in production expected next year.
There is growing concern about rising pork prices in Mexico, not only due to the impact of the PEDV on local production but also the possibility of less U.S. pork being available for the Mexican market. Many Mexican pork producers are concerned that the government might approve duty-free import quotas for pork from other foreign suppliers. At least in the short term, some of these producers look favorably on imports of U.S. pork as a way of moderating prices and helping prevent their government from taking such action.
January exports of U.S. pork to Mexico were up 9 percent from a year ago. February exports were up 25 percent year-over-year and 2 percent above the large volumes of February 2012. PEDV’s impact on local supplies was likely a factor in these very strong results, especially considering the historically high prices for U.S. hams. U.S. prices surged even higher in March, and weekly export data indicates that Mexico continued to buy in March but at lower levels than in February (but please keep in mind that weekly data represent a limited percentage of actual exports).
According to the latest quarterly report (covering January-March) from the Korea Rural Economic Institute (KREI), 19 percent of South Korea’s hog farms surveyed had a PEDV outbreak, reducing piglet production at those farms by nearly 25 percent. Therefore, KREI estimates that 5.8 percent of piglets were lost nationwide and projects a 6.4 percent decrease in the June-August hog slaughter due to PEDV.
Second quarter pork production is expected to be 6 percent lower than a year ago, with June/July production projected to be down 7 percent. Carcass prices are projected to increase about 11 percent between April 1 and June 30. However, KREI notes that the impact of PEDV will be less than some analysts feared, which should ease pressure on the market and alleviate processors’ concerns about a possible shortage of raw materials.