Hog prices rise sharply in the U.S. after new data shows toll of African swine fever on China's herd

The spread of African swine fever in China has been a boon to hog farmers in the Midwest in recent weeks.

On reports that the lethal pig disease took out 17 percent of China's national pig herd over the past year, hog futures prices in the U.S. have skyrocketed, bursting out of a low-value trading range where they've been for about a year.

Farmers scrambled to lock in sales at the higher price levels.

"All the sudden there's a rumor that [the Chinese] are going to have to buy U.S. pork, and we've seen pork futures increase by about $40 a head," said Mark Greenwood, a Mankato-based executive at Compeer Financial, one of the largest ag lenders in the country. "We've been very busy on the hog side right now looking to lock up some profits for producers."

October futures for 100 pounds of lean hog — about half a pig — closed at $82.23 on Friday. That means hogs are selling for about $165 per head for October delivery. Three weeks ago, hogs for October delivery were selling at about $140 per head.

"2018 and most of the first quarter of 2019 have been pretty rough price-wise. Even the best farms struggle to break even," said Dave Preisler, director of the Minnesota Pork Producers Association. "Now with this pricing opportunity, the outlook certainly looks much, much better."

The outlook has been dim since President Donald Trump announced tariffs on Chinese imports last May and China responded by slapping tariffs on U.S. pork and soybeans. In the late summer, hog futures prices meant farmers who hadn't locked in better prices faced as much as a $40 loss on each pig they raised.

The virus is not a threat to humans, according to the World Organization for Animal Health, but it causes internal hemorrhaging and organ failure in pigs.

The few animals in an infected herd that survive become carriers of the disease. Only a minuscule amount of the virus can cause infection, and the virus can travel in animal feed, in meat that isn't cooked thoroughly, or even on shoes, clothing or farm equipment.

Reuters reported earlier this month that not only have 17 percent of pigs in China been lost in the past 12 months, but nearly a fifth of the country's sows had been taken by the disease.

"That's equivalent to the entire sow herd in the United States today," Greenwood said.

It's not clear that China will soften its stance on tariffs for U.S. pork, but U.S. supply will find the demand one way or another. Lean hog prices for October jumped by $40 per head in two weeks.

"Even though this week it gave back some, it's still a really good price," Preisler said.