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AHDB Pig Market Weekly


16 May 2013

AHDB Pig Market Weekly - 16 May 2013AHDB Pig Market Weekly - 16 May 2013

In April, the DAPP averaged 160.9p per kg, almost four pence up on the month. At the same time, the average retail price came down by a small amount. As a result, producers received 42% of the overall retail price.

AHDB

Producers Receive Bigger Share of Retail Price in April

This was a month-on-month increase of nearly 2% and meant that, on average, pig producers received 3% more compared with the same period last year. Bacon prices for the whole of April are not yet available but the producer return in March was unchanged at 35%. However, the share was 3% higher than March 2012; the average farmgate price for bacon pigs was only marginally up on the month, while the retail price also rose by a small amount.

Percentage of Pork Retail Price Received by Producers

Compared with March, the only cuts that recorded a month-on-month increase in price were fillet end leg (2%), boneless shoulder and minced pork (both 1%). The average for diced pork and traditional sausages remained unchanged while other cuts were cheaper, with loin chops down the most at 3%. The year-on-year change varied with fillet of pork and minced pork both down 2%, while traditional pork sausage prices were up by as much as 9%. Generally prices were higher than in April 2012, with the average increase 3%.

UK Pig Prices

For the week ended 11 May, the EU-spec DAPP edged up marginally to 162.79p per kg. The pig price has steadily increased over recent weeks with prices keeping firm. The smaller rise this week is partially attributed to the shorter business week due to the Bank Holiday. The latest DAPP quote was 14p above its level a year earlier. Throughputs for the week were estimated at 152,500 head, marginally down on the year. Carcase weights came up slightly, with an average of 79.13kg for the week ended 11 May, still above last year’s level.

GB Finished Pig Prices

Soure: AHDB Market Intelligence

After the stand on last week, the price of an average 30kg weaner rose to £49.63 per head for the week ending 18 May. The weaner market is slowly moving back towards £50 per head; the last time prices were at a similar level was in 2010. As a result, the latest quote was over £5 per head higher compared with the corresponding week last year.

In contrast, the sow market came down slightly, as prices fell to 102.68p per kg for the week ended 4 May 2013. Falling quotes across the EU continued to impact the UK market, as the price has declined in four of the last five weeks. With a weaker sow market, the annual difference was above 18p below the level for the same week of 2012. While supplies were estimated to be lower this week at 4,900 head, sow cullings remain slightly up for the year to date.

Contrasting Trends in US and Canadian Exports

The declining trend of US exports from the previous quarter continued, as it shipped 19% (82,000 tonnes) less pork between January and March. While US production was down marginally in the first quarter of this year, lower demand from many key export markets was the main contributing factor. In particular, shipments were lower to Japan (10%) and Mexico (15%), with a weaker yen since the start of the year adding extra force to the downturn. Together, the two countries account for over half of US exports and therefore movements in these markets leave a considerable impact on the US figures. Meanwhile, South Korea is generally reducing imports and the US was hit by Ractopamine-related restrictions imposed by China and Russia. The total value of US exports in the first three months amounted to just over $1bn, down 18% on the year.

U.S. Pork Exports, January-March

Source: U.S. Department of Commerce, GTIS

In contrast, Canadian exports edged up to 222,000 tonnes between January and March, up 4% compared with the same period in 2012. The majority of the increment stemmed from higher trade with China, with 11,000 tonnes more pork shipped. In addition, a decline in the average export price also encouraged trade. Exports to Canada’s primary market, the US, also increased by 4%, while shipments to Japan remained steady. Canadian product became less popular in Russia and South Korea with a 25% and 33% reduction. While total volumes were slightly higher, lower unit prices meant that the total value of Candian exports contracted by 2% to C$631.4 million.

Canadian Pork Exports, January-March

Source: Statistics Canada

Uncertainty Over Straw Supplies Post-Harvest

Straw stocks will have been depleted this winter due to the early housing of cattle and sheep and delays to turnout. Combined with reduced winter crop plantings, this has led to concerns developing over potential straw availability in the coming autumn. This far in advance of harvest it is difficult to assess likely straw availability, because the amount of straw baled varies significantly year-on-year and between crops. Typically, a little under half of straw production is used for animal bedding, with most of the remainder incorporated.

A key reason for arable farmers to bale is the financial income from selling the straw. This could be a more important factor in 2013 as lower yields in 2012 are likely to have hit incomes so selling straw could be an additional income stream. Further, this year there are likely to be more spring crops planted, especially spring barley. There is already added financial incentive for arable farmers to bale barley straw, as returns can struggle to compete against other crops based on grain sales alone.

To an arable farmer, the additional income must be weighed against the potential delay in drilling the following crop (due to delays removing the straw) as well as potentially negative impacts on soil health. Weather at harvest will be critical to whether the conditions are suitable to collect it and the quality of the straw collected. As a result of these factors, the availability of straw from harvest 2013 is not yet set but with low stocks, it will be particularly important for pig producers to plan ahead this year.

Feed Market Update

The UK (May-13) wheat futures price remained unchanged over the last week and closed at £191.25/t on Tuesday. The CBOT soyameal price has been underpinned by the tight old crop supply situation and the May contract price closed higher on the week last Friday at $489.8/t, up $29.3/t.

USDA published their first 2013/14 supply and demand estimates for global grains and oilseeds last Friday. It currently forecasts record wheat and maize production, as farmers respond to high prices by planting larger areas. Initial global soyabean production and demand for the 2013/14 season are also projected at records, suggesting a more comfortable surplus situation which may pressurise prices. However, all these forecasts are subject to weather events and changes in planting intentions, as Southern Hemisphere crops will not be sown for another 6 months.

Pig Feed Production Up, Sow Feed Down

Latest figures from Defra show the largest monthly animal feed production figure on record back to July 1992. Production of compound pig feed in the first quarter of 2013 was 4% up on the same period last year. However, production of breeding pig feed was 4% lower than a year earlier, likely the result of the smaller breeding herd recorded in the December census. In contrast, finisher feed production was up 8%, while grower feed increased by 2%. The latter was only up fractionally in February and March, however, perhaps indicating some reduction in the number of pigs in this age category.

Raw Materials Used in Animal Feed Production

Overall animal feed production was 10% higher on the year with ruminant feed up particularly sharply as poor weather delayed turn out of animals onto grass. However, the amount of wheat used in feed was down 4% on a year earlier, replaced by increased quantities of barley (up by half), maize (more than double) and cereals by products (up by a quarter). There was less change in the mix of other ingredients used in feed, although there was an increase in use of rape meal, sugar beet pulp and oils/fats.

French Pork Trade Stable

In the first quarter of 2013, the amount of pork exported by France was little different to a year earlier, as was the quantity imported. Exports were 1% higher than in the first quarter of 2012, despite a 2% fall in pig meat production. Shipments to the leading market, Italy, which takes around a quarter of French pork exports, were up 4%, while quantities sent to Spain recovered from last year’s low level. Outside the EU, the growth in volumes shipped to China continued and they were more than double their level a year earlier. However, this growth was largely offset by lower shipments to a number of markets including the UK, Russia and South Korea.

French Pork Trade, January-March

Source: DNSCE, GTIS

French pork imports were also around 1% higher between January and March than a year earlier. This was despite a 3% drop in shipments from France’s main source, Spain, due to lower supplies available for export. This was more than offset by increased supplies from Belgium, the Netherlands and, particularly, Germany as pig meat production was higher in these countries. During the period, ham imports were down 7%, largely due to shipments from Italy falling by over a quarter, adding to the difficult market for Italian speciality products.

May 2013

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