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United Kingdom Pig Meat Market Update
UK pig prices continued to strengthen in April according to the latest report from AHDB Meat Services for the British Pig Executive.
UK and European Producer Prices
In the week ended 26 April prices were 4.0p more than four weeks earlier, standing at the DAPP was 118.9p/kg deadweight.
The report says that, despite higher slaughterings, this years prices are still 12.1p higher than a year ago. UK producer prices have been given a boost by the continued weakening of the sterling exchange rate against the Euro.
Sow prices in particular have been affected by weaker sterling because nearly all sow meat produced in the UK is exported. This means that prices have risen significantly since the start of the year.
The report shows that average sow prices in mid-April were around 21p higher than a year earlier, in spite of sow slaughterings being more than 30 per cent higher. Germany, Denmark and the Netherlands have also all experienced a strengthening of sow prices in recent months, as the supply situation in Europe tightens.
However, the concerns surrounding the economy in the UK, alongside the weakness of the US dollar, have seen sterling drop considerably against the Euro. In mid-April, the Euro was worth 80p, compared with 68p a year earlier. The 18 per cent weakening in the value of sterling will have made UK imports dearer and exports more competitive, the report says.
Lower slaughterings in a number of EU countries are also helping to support the current market price levels. EU prices continued to strengthen during March, although, with the ending of the Easter holidays, prices in some member states fell back slightly in early April, according to the report.
It adds that there were erroneous expectations that export refunds would be abolishing and this could have an adverse affect on prices.
The report shows the EU-27 average reference price in the week ended 20 April was one per cent lower than four weeks earlier. Prices in France (-4 per cent), Germany (-4 per cent) and the Netherlands (-5 per cent) were lower, but Danish prices strengthened by five per cent in this period. The EU-27 price was 10 per cent higher than a year earlier in Euro terms, but 30 per cent higher in sterling terms.
EU Breeding Sow Numbers
Pig producers throughout Europe have been affected by record feed costs over the past year. The December 2007 EU pig survey results indicate that in the majority of EU countries this has led to a contraction in the breeding herd.
EU-27 sow numbers were three per cent down on a year earlier although numbers in the Netherlands (+1 per cent) and Spain (+2 per cent) were slightly higher. However, there has been a contraction in the breeding herd across the rest of Europe.
The countries that have been hit the hardest by the high price of feed are in eastern Europe, with Hungary, Poland and the Czech Republic all recording declines of over 10 per cent.
The April 2008 pig survey for Denmark showed an unexpectedly sharp drop in the breeding herd. The total number of in-pig sows, although higher than in the previous January survey, was down 10 per cent compared with April 2007.
UK Slaughterings and Production
The AHDB report shows clean pig slaughterings in the UK. In the first quarter of 2008 figures reached 2.31 million head, two per cent higher than in 2007.
However, the Foot and Mouth Disease restrictions movement, that came into force in the autumn of last year, soon meant a large backlog of pigs for slaughter built up.
At the end of 2007 there was still a backlog of pigs awaiting slaughter, and this is likely to have been a factor behind high throughputs in January 2008 slaughterings, the report says.
However, slaughterings have remained higher than last year, even though the FMD backlog has now been cleared. Continuing improvements in sow productivity are likely to have been a factor in the higher throughputs.
In March, slaughterings were two per cent lower than last year, because of the unusually early Easter, which brought two short slaughter weeks. Slaughter figures for April are expected to have risen again because of the early Easter and no short weeks.
Sow cullings so far this year have been between 5,000 and 6,000 a week, much higher than last year.
In January-March 2008 sow cullings were 37 per cent more than in the first quarter of 2007. The increase would have been even more, had it not been for the early Easter, the report says. High feed costs and current industry losses are the prime drivers of these trends.
Feed Prices
In advance of this year’s harvest, cereal prices have fallen back from their peak levels in March, although they remain significantly higher than a year ago. In the week ended 26 April, delivered prices of feed wheat averaged £160/tonne, 56 per cent higher than a year earlier.
In addition to higher cereal prices, soya prices have also recently been rising sharply, reaching £300/tonne. The main cause of this has been a strike by Argentinean producers in response to an export levy imposed by the government. Argentina is the world’s third largest soya exporter.
Further Reading
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- | You can view the full report by clicking here. |
May 2008
