UPDATE 1-Tyson Foods says pig virus to cut pork supply by 2-4 percent

Fri Jan 31, 2014 2:06pm EST

By Meredith Davis

Jan 31 (Reuters) - Tyson Foods Inc, the largest U.S. meat processor, said on Friday it expects pork supplies to drop 2 to 4 percent this fiscal year, raising wholesale prices, as a deadly pig virus spreads through the U.S. hog belt.

Heavier hogs will offset some of the loss in headcount, Jim Lochner, Tyson's chief operating officer, said during a conference call after the company's quarterly earnings release.

Porcine Epidemic Diarrhea virus (PEDv), a highly contagious and potentially fatal pig virus, has contributed to higher hog prices, which are beginning to eat into pork processors' profits. Average prices for live sows surged 28 percent in the last year, according to USDA figures.

"I do want to emphasize information does come out fairly regularly ... and we're just staying on top of it region to region, producer to producer," Lochner said, referring to the spread of the disease.

Industry analysts estimate up to 4 million may have died from the virus, but there are no official figures for pig fatalities from the disease. The U.S. hog herd stood at 65.9 million head as of December 2013, U.S. Department of Agriculture data showed.

PEDv was first discovered in April 2013 in the United States, the world's the largest pork exporter, and has spread to 23 states and Canada. Transmitted orally and through pig feces, the disease causes diarrhea, vomiting and severe dehydration in the animals, but does not affect humans.

Older pigs have a chance of survival, but the virus kills 80 to 100 percent of piglets that are infected.

Tyson also said it was monitoring the number of sows affected by the virus.

Based in Springdale, Arkansas, Tyson reported quarterly net income of $254 million, or 72 cents per share, up from $173 million, or 49 cents per share, a year earlier, beating analysts estimates.

Shares of Tyson were up nearly 10 percent at $37.89 in afternoon trading on the New York Stock Exchange.

Hillshire Brands Co, the Chicago-based maker of Jimmy Dean sausages and Ball Park hot dogs, said on its earnings call on Thursday that it was watching the spread of the virus and its effect on sow prices.