With African swine fever (ASF) raging rampant in major pig-producing areas in the world, and surprisingly in some not so heavily engaged in this business, there are two contradicting notions in areas that still enjoy freedom from the devastating effects of this virus: that they will not be part of the infected regions and that they will be able to make a lot of money selling pork to those infected regions.
Has anybody stopped to consider the question of whether feed prices will remain the same? History says that, when pig prices go up, feed (not just certain ingredients, but feed as a whole) also finds an opportunity to rise in price. After all, feed mills will also want to make good on losses of previous years and share in a bonanza that is not coming (yet). I do not want to even consider where feed prices will go if some vital ingredients become scarce (some come from already infected areas and this causes many professionals to pause and think hard about such paradox).
In my opinion, feed prices will increase as hog prices increase, if they do, which I am not so sure they will. If that happens, instead of a hog price bonanza, we will be left with an oversupply of pigs sold at discount. And, if feed becomes so expensive, then we might not have enough pig meat to take advantage of high hog prices.
Why isn’t anybody talking about feed prices in terms of a global ASF catastrophe (or opportunity, depending from where one sits)?
View our continuing coverage of the African swine fever outbreak.