Nearly forty years of commodity market analysis, says Arlen Soderman, he has never seen a spectacular event in the industry as dramatic as the spread spread across China's pig farms.
The chief commodity economist at INTL FCStone Inc., the New York brokerage, warns customers about the impact of African swine fever, which he says is not only reporting but will spur structural change in the entire farm industry in China, escalating world meat prices.
Most react with disbelief, Suderman said, but the situation is likely to worsen before it gets better.
"I've never encountered anything about the extent of African swine fever," Soderman said in a telephone interview from his Kansas City office, where he reports on a team of 10 people on the ground in China.
"It's going to be a big story in the world."
The virus, first reported in China in August, hit pigs across the country, as well as in Mongolia, Vietnam and Cambodia. In China, which raises half of the world's pigs, it has led to the death and destruction of millions of pigs, pushing pork prices and resonating across the world's grain markets, meat and markets as well as the Chinese economy.
The latest forecasts indicate a loss of pigs this year equal to the annual supply of the European Union.
Before joining FCStone, specializing in commodities and dating back to its origins almost 100 years ago to an egg wholesaler door to door, Suderman's career included 12 years focusing on production efficiency and crop management and marketing risks at Kansas State University Extension and another 12 years working for the Kos progress farm.
Soderman has doubts about official data in China showing a slowdown in the number of pigs affected since the end of 2018, when the government claims the disease "is under effective control."
It offers some of the most pessimistic assessments among industry professionals, announced by its colleagues in China. Just last week, they reported to him that African swine fever is "spreading just as it was, and continues to worsen," he said.
The US Department of Agriculture echoed Suderman's views, saying last month that pig farms "are considerably" under reporting outbursts.
"Unofficial reports from China point to far greater losses," official data show, showing that bullets are part of China's total supply of pigs.
Three farmers in the provinces of Hebei and Sichuan refused to speak publicly about the hesitation to report on infected pigs, while mentioning the political sensitivity of the matter, but admitted that there were reportedly land.
Although pig farms are required to report outbreaks of their local governments, infections can not be recorded by officials because of the next cost of farmers' compensation for animal losses, and fear of political response to the widespread exposure of the disease.
No one answered the agricultural talks in the provinces of Hebei and Sichuan. A fax sent to the Chinese Ministry of Agriculture was not answered.
The Chinese government says more than 1 million pigs have been introduced since last August, compared to 400 million pigs.
Living pig stocks fell about 19 percent in March, a year ago, while the number of wild flocks fell by 21 percent, the Agriculture Ministry said today. Prices of pork in China are about 14 percent since August 1, when the disease was first reported.
Soderman estimates that the national population of pigs in China has fallen by more than 40 percent, or about 300 million pigs in terms of annual output. This includes pigs that have been killed by the virus, as well as panic farmers that have killed their flocks and are avoiding restocking for fear of disease, he said.
A Bloomberg survey of 11 analysts and traders estimated an average decline of 30%.
In Shandong, one of China's largest breeding areas, official data show pork feeding was down 33 percent in March compared to a year ago. According to reports from FCStone sources in China, including local food suppliers, Soderman estimates it is falling more than 50% in the region and continues to deteriorate. The brokerage, which serves more than 20,000 customers in 130 countries, receives information from customers throughout China's pork chain, said Sudman.
There is no vaccine to prevent pigs from being infected and development one can take years. It could be five to seven years before the disease stops spreading and farms replenish the lost stocks, he said. This could result in an annual pork deficit of 16.2 million tons, Suderman said – 1.3 times more than the US produced last year.
"This capacity is not available anywhere in the world unless China is willing to pay a price high enough to offer this meat from US consumers as well as the rest of the world," he said.
"I do not think there are enough refrigerated ocean trucks to fill this gap even if China can buy it."