Swine Flu On The Rampage
The recent outbreak of African swine flu that has been annihilating China’s pig population may just be worse than Chinese officials are letting on. The current shortage has driven pork prices up 42% since late February and may still have more crispy crackling left.
So far, over 100 outbreaks of the vicious disease have been registered in China, but many experts within the industry believe this number is far lower than the more worrying reality. Registering the disease in an area requires officials to slaughter the animals and provide farmers with compensation of $180 per head, incentivising some areas to under-report the disease to save their own bacon!
As the world’s largest producer of pork, an outbreak of this magnitude has the potential to cause havoc in the global pork supply chain and send prices further into orbit. Prices eased slightly yesterday, dropping 3.1% after reaching a new high the previous day. However, a deepening in the crisis could see an even higher appreciation for lean hog prices.
The US Department of Agriculture has estimated that China’s total pig inventory may fall by as much 13%-15% this year alone, and push it to double its traditional import rate. US pork producers are poised to benefit extensively from this wave of demand, but without a resolution to the crisis, pork prices may take some time to come back to earth.
Oink oink.
