As cases spread to other regions such as Beijing and Henan, the effects of these closings and the reduction of poultry inventories will reduce feed consumption in the poultry industry. However, if consumers switch to pork instead of poultry meat, this will offset the losses in the poultry sector and reduce the net effect on feed demand.

"Since hogs are less efficient converters of feed to meat and use a higher proportion of energy feeds like corn, any substitution of pork for poultry that occurs will dampen the negative effect of reduced poultry production on feed demand, particularly corn," said Bryan Lohmar, US Grains Council director in China. "Conversely, fish are more efficient converters and use less energy feed, so if consumers switch to fish this will help soybean increase demand a little, but not corn."

While there are no confirmed reports, there are suggestions that people may be substituting pork for poultry. Some shoppers who shun poultry will instead buy pork, and groups at restaurants may order two pork dishes rather than the more typical one chicken and one pork dish. Research has shown that pork is the primary substitute for chicken. There is also speculation that consumers are avoiding meat in general, which could have more negative implications for corn feed demand. Fish prices are however rising, an indication that consumers may be substituting fish for poultry, not pork.

The ultimate effect on feed demand will depend on the duration and geographical spread of the outbreak. So far, all but five cases have been found in Shanghai, Jiangsu and Zhejiang provinces, home to about 11 per cent of China's population. The five additional cases have been found in Anhui (2), Henan (2) and Beijing (1), home to another 13 per cent of China's population. If we assume these provinces represent also about 25 per cent of China's poultry consumption, and about half the birds are slaughtered in these provinces over one month's time (a liberal assumption), then that would result in only a little more than a one per cent reduction in poultry production. At a feed industry conference today in Chengdu, some poultry producers expressed the view that there is too much hype over the problem, and they are already getting ready to restock inventories.

If the virus continues for another month or two and spreads around the country, however, the effect would be more significant. China produces around 17 million metric tons of poultry meat, so a five per cent reduction is 850,000 metric tons of meat. The birds at live markets tend to be "high quality" traditional varieties with far less efficient feed conversion than modern chickens in the west, roughly 4:1 live weight, or 5.3 to 1 feed to meat, with corn comprising about half of that feed. A five per cent reduction in meat production would thus result in about 2.25 million tons (88.5 million bushels) reduction in corn feed demand, or only about 1.6 per cent of China's 144 million tons (5.6 billion bushels) of corn feed demand for 2012/13 (USDA estimate), and 1.1 percent of USDA's estimated 207 million tons (8.1 billion bushels) 2012/13 total corn demand in China.

The substitution of pork for poultry that occurs is thus likely to limit any reductions in corn demand, and if a little more than half the poultry is substituted by pork, then corn feed demand will actually rise because of the higher corn input required to produce pork. The effect of pork substitution for poultry will be somewhat lagged; increased pork consumption today will raise pork prices and cause inventories to replenish faster than otherwise, resulting in more feed demand over the summer. However, if fish is the primary substitute, this will do little to increase corn feed demand, but would mitigate the fall in protein meal demand brought about by the lower poultry production.