What happens in other species can impact pork prices. A case in point may be avian influenza.
Pork producers have more important things to think about than avian influenza, but they should probably keep on eye on the situation in the United States. Although pork prices are not being affected now, if the price of poultry goes down significantly because of the disease, the demand for chicken will go up, reducing the demand for pork.
A serious strain of avian influenza was found in Minnesota in early March, threatening the No. 1 turkey producing state in the United States. Some countries will ban the import of turkeys from this country as a result, some will restrict the ban just to Minnesota. Although, no further cases have been reported in Minnesota (as of publication), avian influenza has been found more recently in Kansas, which is not a serious player in the poultry business. Another case was reported in a California turkey flock.
However, avian influenza in a turkey flock was confirmed in Arkansas, the No. 3 broiler state in the country. “You could get into a situation if the disease starts popping in several places in Arkansas where our import customers ban all products from Arkansas,” says Steve Meyer, president of Paragon Economics and a consultant to the National Pork Producers Council. “Mexico, the European Union and some others have done that already.”
If that happens, then you could have a significant impact on chicken exports, according to Meyer. “And that product would back up and drive chicken prices down, which would have a negative impact on pork demand. That's where the impact on pork comes from – through lower prices for turkey or chicken.”
Meyer says it is a bit encouraging that we have heard no more reports out of Arkansas.
So, avian influenza is a potential negative for pork prices, but it is not affecting the market too much at this point, says Meyer. “The west coast port situation, the stronger dollar, the fact that we have been running a lot more hogs than what we anticipated in the December Hogs and Pigs report; those things are far more important than avian influenza,” Meyer points out.
Given where hogs prices are now, if producers are still contemplating any kind of expansion this year, they need to think about that a little bit, suggests Meyer. “We had a pretty sizeable expansion of the breeding herd in the December report. That, plus not very many pigs lost this winter to PEDv means that supplies are going to be large this year.”