PED outbreak in Japan raises pork prices

The worst outbreak of porcine epidemic diarrhoea (PED) in Japan in 18 years is raising pork prices and may boost imports from the biggest buyer, Bloomberg reports.

The agriculture ministry has discovered 186,825 cases of PEDin 251 farms in 19 prefectures since it confirmed the latest outbreak of the disease in October. As many as 39,285 pigs have died, the highest number of fatalities since 1996, Tomoyuki Takeshita at the ministry''s animal health division said.

The United States, Canada, South Korea and Taiwan have also reported outbreaks. More than 5,000 cases have been reported in the United States, according to the National Animal Health Laboratory Network. American pork production may drop by the most in three decades this year, Rabobank International estimates. Futures climbed 49% last quarter, the biggest rally in 15 years, as the virus threatened United States production.

"The disease will start having an impact on pork supply from around June as it spreaded to Kagoshima and Miyazaki prefectures in December, and pigs become ready for slaughter after six months," said Akio Tamai, a pork and beef markets researcher at Agriculture & Livestock Industries Corp. in Tokyo.

Hog futures for June settlement gained 0.2% to US$1.21 per pound at 9:50 am on the Chicago Mercantile Exchange. Prices reached a record US$1.33 per pound on March 18. The virus has increased costs for hog-farm operators such as Smithfield Foods Inc. and Maschhoffs LCC.

Wholesale prices of pork carcasses traded on markets across Japan jumped 17% to 484 yen per kilogramme (US$2.13 per pound) on average in February from a year earlier, data compiled by the ministry showed. Prices in Tokyo gained 2.2% to 519 yen a kilogramme on average on April 4 from a day earlier.

Prices in Japan will probably extend gains for the next six months, raising costs for meat processors including Nippon Meat Packers Inc. as the outbreak shows no signs of abating and will worsen a seasonal decrease in supply during summer, according to Agriculture & Livestock Industries Corp.

Kagoshima is Japan''s biggest pork-producing prefecture, representing 14% of the total Japanese herd. Miyazaki is the second-largest producer with 8.7% share, according to the ministry.

The first case in the current outbreak was found in the southern island of Okinawa on October 1. Kagoshima has confirmed 153,000 cases of the disease, or 82% of the total.

"Japanese demand may shift to imported meat because of an outbreak of the disease," said Makiko Tsugata, an analyst at Market Risk Advisory Co., a researcher in Tokyo.

Japan is the world''s largest importer of pork, buying 1.24 million tonnes last year, representing 18% of global purchases, according to the United States Department of Agriculture. The United States is the biggest exporter with 2.29 million tonnes in 2013.

The ministry called an emergency meeting of prefectural officials in charge of animal health and disease control on April 2 as the number of infected farms jumped in March. The virus may be spread by people amid transportation of feed, or by animals during their shipments to meat markets, Takeshita said.

The ministry expects 4.1 million pigs will be shipped from farms across Japan for slaughter for meat in the three months through June 30, down 1% from a year earlier. The disease may reduce actual shipments by about 1%, Tamai said.