BPEX Weekly Export Bulletin
23 March 2012
With £ 25 m. pig red offal are proportionally more exported than poultry offal (£ 15 m.), sheep offal (£ 4 m.) and cattle offal (£ 12 m.).
With the EU reference price for weaners around the € 52 mark and EU pig prices now above € 1.60 /kg, the rising price cycle that started in January is set to continue.
The European markets are well balanced. Still, the demand is not high in spite of the upcoming Easter but the supply fits well with the current demand. Prices of legs and shoulders are under pressure. The market for loins remains bad. On the other hand the market for bellies is satisfactory. The situation on the Russian market is a little troubled; the demand is fine with good prices, but Russia has announced a possible closing for meat from the EU. Should it happen, the quantities must be sold in Europe impacting a downward pressure on prices. After a fine start after the New Year China fell back slightly, while Japan is buying stable quantities.
(Sources, Danish Crown, Tican, Danish Agriculture and Food Council)
Jutland Meat has a deficit for the second time in a row
After a year where Tican and Danish Crown raised pig prices to their members, the privately owned Jutland Meat has to realize that competing with the farmer-owned slaughterhouses is hard. In 2010/11 Jutland Meat had its worst financial result since 2005, when the Dutch company bought the slaughterhouse plant in Struer from Danish Crown. The net loss before taxes was a just over € 2 million compared to a small deficit of € 140,000 the previous year. During the same period Tican and Danish Crown increased their profits. The bottom line of the privately-owned slaughterhouse is not entirely comparable with the results of the cooperatively owned companies, as Jutland Meat continually pays the farmers a final pig price, while the cooperatively owned companies settle part of the price as residual payments after the end of the year. In the annual report the slaughterhouse company indicates that the dioxin crisis in Germany in early 2011 was a major reason for the pressure on the company's margins. Director Francis Stortelder also indicates the tsunami in Japan as an unusual event, which cost the company dearly. One of Jutland Meats’ customers in Japan lost 300 workers at the plant during the tsunami, impacting a decline in turnover for some time. During the reporting period Jutland Meat slaughtered an extra 100,000 pigs and reached 758,000 pigs over the period. The owner of the slaughterhouse is the Dutch company Meat Business Europe.
(Source, Årsrapport 2010/11)
|Danish slaughterhouses - payments week commencing 19 March 2012|
|Slaughter pigs (70.0-86.9kg)
Difference to last week
|Sows (above 129.9kg)
Difference to last week
|Boars (above 109.9kg)
Difference to last week
The reputed French pâtés manufacturer increased its market share last year even compared with its own brand products. The diversification developed recently in the food service sector and on export markets, is still showing a two digits growth but could be threaten by increased pig meat prices in 2012. Nevertheless, in 2011 the turnover of Hénaff increased by 5.2% to reach €42.3 million. Total retail sales increased by 1% and fresh sausage sales increased by 14%.
Herta halal products
Disappointed with the sales and still suffering following the suspicion of introducing pig meat in Picnic halal sausages early last year, the Nestlé group subsidiary has finally decided to stop their halal range and the production of halal products.
Porc Bio Coeur de France
The gathering of 3 groups of producers (Agrial, Cirhyo and Copalice), 2 abattoirs Tradival in Loiret and Sicaba in Allier), feed manufacturers and organic food associations resulted in the the new initiative named “Porc Bio Coeur de France” financially supported by “L’Agence Bio” (€513 000). Forty new producers have joined to the scheme, the main attraction being the price of €3.50/kg cwe, almost three times the price of conventional pigs. This price in indexed on feed prices, most producers are breeders- finishers, they have an average of 50 sows and half of the feed is produced on the farm. Organic pig meat remains a niche market representing less than 5% of total pig meat production.
Our basic price for 56 TMP lost 1.2 cents yesterday in Plérin, in a context of stability for European prices. A little more competitive this week, French meat could be sold more easily for exports; this will be good for French market.
There is nothing new to report for the French market. Offers are still not enough to cover all requirements. Without surprise, the last FNB –FNCBV prices lost 5 cents for 25 kg and -94 cents for suckling pigs.
Consumption is very calm due to the third week of the month which has just begun. For exports, sales seem to be more regular. In this context, the prices are stable with difficulty, even going down under the continuous pressure of the buyers.
|Pork prices RUNGIS week commencing 19 March 2012|
|Cut name||Price range (Euro/kg)|
|Back fat, rind-on||0.75|
|Loin including chump||2.83|
|Loin excluding chump||2.47|
|Belly extra without trimmings||2.43|
Since the beginning of February purchasing prices for half carcasses have remained unchanged. On cuts, increased prices could only be achieved for collars and filets which were well demanded. Although shoulders, bellies and fat product were ordered in good quantities, prices remained unchanged.
According to Westfleisch MD Helfried Giesen, thorough investigation into allegedly deliberate manipulation of the AutoFom system at the Westfleisch plant in Coesfeld have found no proof of any intention to harm farmers by wrongly classifying pigs. The AutoFom system had been temporarily shut down in December last year because of suspected manipulation. The detected inconsistencies are continuously being investigated by the public prosecutor. Since the first allegations, four surveyors have inspected the system’s data records and found that the detected inconsistencies were caused by a number of approved and individually undertaken alterations to the system with apparently no impact on the classification of carcasses. According to Giesen, this has also been confirmed by the gauging authorities as final approval for the resumption of the system was given on 29th February.
(Source, Lebensmittel Praxis)
|Pork Prices Hamburg Market week commencing 19 March 2012|
|Cut Name||Price range (€/kg)|
|Round cut leg||2.10/2.25|
|Leg (boneless, rindless max fat level 3mm)||2.95/3.20|
|Belly (bone in, ex-breast)||2.30/2.40|
|Sheet Boned Belly (rindless)||1.95/2.25|
|Half Pig Carcasses U class.||2.02/2.12|
Rabobank predicts a strong rise of production
Spanish pork production should progress by 3.8% this year to 42.3 m. heads bucking European trends. This alone means that European production should remain stable in 2012 (-0.1%).
Cárnicas Solá to rebuild Mollerussa abattoir
The company plans to invest € 8 m. in rebuilding the major pig abattoir of Mollerussa (Llleida) recently bought by Industrias Cárnicas Vilaró. Cárnicas Solá has a turnover of € 151.6 m. in 2011 (+20,5%) of which € 129 m. are exported. Since being expanded by Campofrio many years ago, the plant has had quite a few owners and seems to have brought bad luck to some of them.
(Sources, Alimarket, BPEX)
|Pork prices Barcelona Market Week commencing 19 March 2012|
|Cut Name||Price range (€/kg)|
|Carcasses (secondary grade)||1,703/1,709|
|Gerona Loin Chops||2,48/2,51|
|Loin Eye Muscle||3,41/3,44|
|Round Cut Legs||2,42/2,45|
|Rindless Picnic Shoulder||1,63/1,66|
|Smoked Belly with Spare Rib Section Cut off||2,52/2,49|
|Shoulder chap or Head Jowls||1,13/1,16|
|Back Fat, rindless||1,08/1,11|
Takeover of Hendrix approved
The European Commission has cleared under the EU Merger Regulation the proposed acquisition of animal feed producer Hendrix, currently part of Nutreco, by the Dutch agricultural commodities and feed producer Forfarmers.
Colruyt implements chemical castration
After much debate the use of the vaccine Improvac is now being implemented in Flanders farms supplying Colruyt with pork.
(Source, Boerderij Vandaag)
On March 20, 2012, the ban on the import of cattle and pigs from the EU to Russia came into effect. Rosselkhoznadzor explained that the ban was due to the spread of dangerous viruses affecting cattle and pigs in EU region. Rosselkhoznadzor is planning to hold negotiations with relevant EU authorities to discuss the ban.
ASF cost RUB 8 billion (more than USD 273 million) in 2011
According to Rosselkhoznadzor, the losses due to the spread of ASF in 2011 amounted to RUB 8 billion. The direct losses (from pigs slaughtered) amounted to RUB 700 million (about USD 24 million) the rest is indirect losses (due to budget expenses, trade and transportation bans etc). In 2011 200,000 pigs died or were slaughtered due to ASF, in 2012 the number of dead/slaughtered animals already reached 40,000. The latest outbreak of ASF was registered in Volgogradkaya Oblast. In the 20 kilometer zone around the epicenter of the disease there are 1730 pigs that are likely to be slaughtered to prevent the spread of ASF.
|Imported Pork Moscow Market (March 19):||Imported Pork St.Petersburg Market (March 19):|
|Loin (with bone): USD 7.2/kg||Shoulder (no bone): USD 5.6 /kg|
|Neck (no bone): USD 7.4 /kg||Leg (with bone): USD 4.53/kg|
|Liver: USD 2.17/kg (Source, Meatinfo.ru)||Heart: USD 3.14/kg (Source, Meatinfo.ru)|
Production still falling
Rabobank is banking on a fall of production of 5.8% this year, following some recovery in 2009-11. GIRA is even more sanguine with a forecast of -13%. Sow numbers are falling and this is partially replaced by increased numbers of imported weaners.
(Source, Rabobank, GIRA)
Shuanghui confirms rapid growth
Confirming bulletins passim, Shuanghui Group, China's biggest hog processor, plans to boost its output by 50% this year. Chairman Wan Long, the report said that the Henan-based company could slaughter 15.5 m. hogs this year, up from 10.3 m. in 2011. Mr. Wan said that sales could reach CNY 63 bn. (£ 6.3 bn.) this year. He added that the company will invest CNY 6 bn. to build new projects in other areas including Harbin, Changchun, Shenyang, Nanning and Kunming.
(Source, Asian Agribusiness)
Zhongpin reported a net income of 40.5 m. in fiscal year 2011 (+10%). The company's revenues advanced 54% to £ 918 m. in 2011. Xianfu Zhu, chairman and chief executive officer said that Zhongpin added 201,000 tonnes of annual capacity for pork and pork products to bring total capacity at year-end to 904,760 metric tons, the company said. At the end of 2011 Zhongpin had an annual capacity of 728,760 metric tons for chilled and frozen pork, 126,000 tons for prepared pork products, 20,000 tons for pork fat at the end of 2011. For 2012, Zhongpin said it expects sales revenue to be in the area of £ 1.02 bn. Gross profit margin is projected to be in the range of 8.6 to 10.2%. Net profit margin is forecast to be 3.3 - 4.2%. Major investment include
- Around £ 37 m. for a new production, research and development, and training complex in Changge, Henan province. The new facility will have a production capacity of about 100,000 metric tons for prepared pork products and a centre for research and development, training, and quality assurance.
- Around £ 6 m. in a by-product processing plant in Changge, Henan province, to product sausage casings and the raw material used to make heparin sodium.
- Around £ 11 m. in a cold-chain logistics distribution centre in Henan.
- Around £ 55 m. in a chilled and frozen food processing and distribution centre in Kunshan, Jiangsu near Shanghai.
Yurun post strong numbers
China Yurun Food Group posted a turnover of HK$ 32.32 bn. (£ 2.63 bn.), up over 50% from 2010's HK$ 21.47 bn. Overall gross profit margins are down to 8.6%, however this is down from last year due primarily to the significant increase in cost of hog prices. Also affecting margins were the weakened market confidence in the Group's products, the increasing difficulty in transferring the Group's increased operation costs to its customers and the Group's product promotion activities conducted in Q4 of 2011 aimed at retaining market share.
Pig farmers are angry
Pig farmers demonstrated in Taipei at the doors of the Ministry of Agriculture against imports of US pork.
(Source, Boerderij Vandaag)
Solid pork demand
Despite a rise of price of 1% in February year-on-year, demand for pork remains strong at +0.5%. Exports remain buoyant too. This means that despite some increase of production, pork prices are likely to remain firm.
Strong progress in US exports in January
According to figures from the US Farming Department USDA US exports of pig meat (including by-products) reached 211,456 tonnes representing an increase of 28 % in volume and 43 %in value compared to January 2011. Mexico was the most important importer in January in terms of volume followed by China/Hong Kong. In value Japan was number one followed by Mexico. The quantities to Japan and Mexico increased by 21 and 17 % respectively compared to last year, while exports to China/Hong Kong increased by as much as 88 % measured in volume and 158 % in value. For the whole year 2012 USDA expects a modest increase in exports of pig meat compared to the previous year.
(Source, Markedsnyt for Svinekoed)
The USDA will lead its largest to date agricultural trade mission to China to strengthen business ties taking some 40 US companies and representatives from six states as well as a senior official from the Agricultural Department to Chengdu and Shanghai at the end of March. Last year China emerged the number one market for US agricultural goods, purchasing US$ 20 bn. Last month, US Agriculture Secretary Tom Vilsack hosted China's Vice President Xi Jinping and Agriculture Minister Han Changfu at the first US-China Agricultural Symposium in Des Moines. The ministers signed a Plan of Strategic Cooperation that will guide the two countries' agricultural relationship for the next five years.
Boosting marketing spend
The Canadian Government is investing C$ 1.3 m. to promote Canadian pig genetics at export. In particular, Genesus Inc. is hoping for a large Chinese contract worth US$ 1.6 m.
Finland has stepping up control for swine fever on the Russian border as the nearest case is only 160 km away. Swine fever has also been detected in Belorussia.
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