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AHDB Pig Market Weekly


21 May 2012

AHDB UK Market Survey - 18 May 2012AHDB UK Market Survey - 18 May 2012

British pork will soon be on menus in China following a deal reached by Agriculture Minister Jim Paice.

AHDB

UK pig meat heading for China

He announced the landmark agreement while on a mission to China to boost trade for British food and farming. BPEX Chairman Stewart Houston, who accompanied the minister on the mission, said, “This is a wonderful achievement and something we have been working towards for several years in close co-operation with Defra and the British embassy in Beijing.”


China is both the biggest producer and consumer of pig meat in the world, accounting for nearly half of the global total. Although it is largely self-sufficient, the scale of the Chinese market means that it is still among the world’s largest importers of pig meat. Last year, China imported 467,000 tonnes of fresh/frozen pork and 883,000 tonnes of offal. The total value of this trade was over US$2 billion. Pork imports were more than double those in 2010, while offal exports were up by more than a quarter because of lower domestic production following disease problems and poor profitability. Chinese production is expected to recover this year so imports will likely be lower than in 2011, with some forecasts suggesting they may be down by a quarter.

The United States is the main supplier of pig meat to China, accounting for around half of pork shipments and 60 per cent of offal. The other major supplier is the EU, which last year exported 142,000 tonnes of pork and 269,000 tonnes of offal to China. The value of this trade was €483 million. The main EU Member States exporting to China in 2011 were Denmark, Germany, Spain and France, each of which shipped over €80 million worth of pig meat. Denmark accounted for over half of the offal sent to China from the EU.

As a smaller producer and exporter of pig meat, the UK may not be able to match the main EU suppliers to China. Nevertheless, the size of the Chinese market represents a significant opportunity for UK exporters, particularly given the Chinese preference for offal and other cuts for which there is limited domestic demand. Once trade is established, the annual value could be worth up to £50 million, equivalent to about 20 per cent of current UK pig meat export value.

Pig market trends



Prices

Although the rise in finished pig prices continued during week ended 12 May, the rate of increase slowed. The DAPP EU Spec increased by just 0.18p to average 148.39p per kg. The cold and wet weather isn't helping consumer demand for pig meat, both at home and in the EU, while the strengthening of the pound against the euro has reduced the competitiveness of UK product.

Demand for weaners was limited, with feed prices remaining high and some seasonal easing back of prices expected in the autumn, when today’s weaners will be ready for slaughter. As a result, the average 30kg weaner price fell be nearly a pound to £44.29 per head for week ending 19 May. This was below year earlier levels for the first time since November.

Trade

UK pork imports remained subdued during March, continuing the trend from the previous two months. Shipments were 13 per cent lower than in March 2011 at 27,200 tonnes, although this does represent a modest recovery from February’s low point. Germany and Spain continued their strong performance, while Denmark also shipped more pork than a year earlier. All other major suppliers sent lower quantities to the UK. Imports during the first quarter were 15 per cent down on the same period last year.

Bacon imports to the UK were also lower, with shipments totalling 25,000 tonnes, eight per cent lower than in March 2011. This is a slightly smaller fall than in the previous two months, with the figure for the first quarter ten per cent lower than a year earlier. The monthly fall was driven by a 17 per cent drop in shipments from the Netherlands, partly offset by small rises from the two other major suppliers, Denmark and Germany.

UK exports of pork in March were four per cent lower than a year earlier at 11,800 tonnes, although with higher prices the value of exports rose by nine per cent to £15.2 million. Shipments to Germany, Hong Kong and the Netherlands were all lower; with Ireland and Denmark the main destinations taking increased quantities. Despite the drop in March, exports for the year to date were still one per cent higher than in the first quarter of 2011. In contrast, offal exports remained strong during March, up by 21 per cent year on year to 3,800 tonnes, despite a fall in shipments to Hong Kong, the largest market.

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