BPEX Weekly Export Bulletin
15 June 2012
The European markets for fresh meat products remain unchanged. The demand for legs has stabilized with satisfactory sales. Exports of front parts, loins and bellies are stable too with fine demand. The British bacon market is steady with good demand. With respect to markets outside Europe the activity is still fine to the Far Eastern markets, while trade with Russia is calm.
(Sources, Danish Crown, Tican, Europa and Danish Food Council).
Agrocura downgrades forecast for third quarter
The exchange ratio between grain and pork is bad, but nevertheless prospects are that pork prices are increasing. Troels Schmidt, analyst of Agrocura, estimates that the pig quote in the third quarter of the year could have difficulty to reach the forecast average of € 1.667 including residual payments. However, no new forecast for the third quarter has been prepared. Pig prices have already risen sharply in the US to above $ 90, where all previous peaks have been at $ 80. It is despite an increasing dollar rate, which could put a damper on exports. On the other hand the German market is a little behind and it will also affect the Danish settling prices. Agrocura’s forecast for the first quarter proved correct. The second quarter is approximately three Cents below the forecast.
Large order from China
In connection with the visit of Chinese President Hu Jintao's to Denmark Danish Crown will sign a contract with Shineway, one of China's largest meat and slaughterhouse groups. The agreement includes the export of 3,000 tonnes of various pig meat products. Soren Tinggaard, director of Danish Crown's pork division will not disclose specific figures for the value of the order but confirms that Danish Crown certainly accounts for 10 % of total exports from Denmark to China, which is equivalent to € 300 million. Exports are still mainly driven by the so-called "China" products such as pig heads, feet etc. but a stronger interest in more expensive products is already being noted.
|Danish Slaughterhouses - payments week commencing 11 June 2012|
|Slaughter pigs (70.0 – 86.9 kg)
Difference to last week
|Sows (Above 129.9 kg)
Difference to last week
|Boars (Above 109.9 kg)
Difference to last week
Innovation being one of the key elements to respond to the increased global demand for meat, French companies show today they are not short of ideas and expertise. Here are three examples of innovation presented by three different French processors and involving three different parts of the pig.
- Smoked Fillet by Bahier: Three different recipes for this new product are: nature, with Provence seasoning or with pepper. The fillets come from sows to bring more flavour and tenderness to the end product. Pre-cooked, pre sliced and retail-packed, the product can be consumed cold (ideal for sandwiches or snacks).
- Rubbed PGI Bayonne ham by Delpeyrat: The famous ham from the south west of France salted with locally produced salt (from Salies de Béarn rubbed with Espelette chili or rubbed with black pepper.
- Precooked seasoned pork joint by Brient: three new seasonings have been developed by Ets Brient, charcuterie processor based in Brittany: Provence herbs, mustard (coated) and the unavoidable Espelette chili seasoning. This company is also working on the development of salads with charcuterie products especially based with sliced and seasoned pork nozzle.
Without great surprise, our basic price increased by 0,2 cent. Export is going well, especially to Poland and Ukraine. These countries have difficulty to suit the needs of the moment due to the European Football Championship.
The French market is stable. FNP-FNCBV prices are increasing, +8 cents for 25 kg and +1,46 € for post weaning.
The slaughter for cuts is good but no more for the season. Consumption is not very dynamic, even if it is considered rather regular. Offers are not very high and prices are stable.
|Pork prices RUNGIS week commencing 11 June 2012|
|Cut name||Price range (Euro/Kg)|
|Back fat, rind-on||0,65|
|Loin including chump||2,93|
|Loin excluding chump||2,73|
|Belly extra without trimmings||2,62|
While it was hoped that the European Football Championship would push demand for pig meat this mostly applies to the hosting countries. Despite exports to these countries going well the demand on the domestic market is sluggish and the development of the markets still depends on the development of the weather conditions. Prices for sow meat remain largely unchanged and sales are satisfying.
Production higher than expected
The Federal Statistics Bureau has published a slight upwards correction of the 2011 figures of German pig production. A total of 59, 74 million pigs were slaughtered last year, which represents an increase of 1,9% or 1,11 million animals compared with 2010 figures. The preliminary figures had stated a total of just below 59,5 million pigs. The correction has also led to pig meat production being higher than expected. Nearly 5,62 million tonnes of pig meat were produced in Germany last year – an increase of 128,000 tonnes or 2,3%. The increase in production is due to higher domestic supply of pigs for slaughter. While in 2010 5,22 million imported pigs were slaughtered in Germany, this number reduced to 4,72 million in 2011. However, the continuous expansion of the German pig production might now come to a halt for the first time in years. According to both AMI and the EU-Commission German pig production is expected to decrease by 1,5% in 2012. Preliminary slaughter numbers for Q1 2012 seem to support this forecast. Between January and March 2012, 14,61 million pigs were slaughtered, which is a decline of 150,000 animals or 1% compared with the previous year.
According to the Federal Association of the Food Industry (BVE), overall food exports have developed very positively during the current year. In May this year the index was 10% above last December's figures. Future exports are expected to develop positively for most areas of the food industry with meat exports being expected to rise by 141, 7%. Exempt from this positive outlook are processed meat products. While the current business situation is very stable and satisfying this development is not expected to continue. In 2011, food products worth € 48,8 billion were exported.
Meat consumption remains private matter
The Federal Government has rejected an inquiry by the German Green Party Buendnis 90/Die Grünen. The party had proposed to implement regulations in order to reduce the consumption of meat.
|Pork Prices Hamburg Market Week commencing 11 June 2012|
|Cut name||Price range (€ / kg)|
|Round cut leg||2,15/2,30|
|Leg (boneless, rindless max fat level 3mm)||2,95/3,25|
|Belly (bone in, ex-breast)||2,30/2,45|
|Sheet Boned Belly (rindless)||2,25/2,45|
|Half Pig Carcasses U class||2,14/2,22|
Pork prices are rising
The Lonja de Mercolleida in Catalonia, the main reference market for pork in Spain, is positing its highest prices for pork in ten years. The lonja notes that pork prices are also driven by higher input prices.
Respected Catalan processor Carns I Embotits Garrotxa is the latest Spanish meat company to close.
Economic weight of pig production in Murcia
It is well known that the economy of this small communidad relies heavily on the pork sector. According to principal local processor El Pozo, the sector represents 10,000 local jobs and 20% of local food production for a turnover of € 500 m. (fruits and vegetables are another strong point in Murcia).
Mission to the Czech Republic
Major Spanish pork processors including Toni Josep, Guissona and Friselva visited the country in a mission organised by the FECIC association.
|Pork prices Barcelona Market Week commencing 11 June 2012|
|Cut name||Price range (€ / kg)|
|Carcases (secondary grade)||1,816/1,822|
|Round Cut Legs||2,45/2,48|
|Rindless Picnic Shoulder||1,66/1,69|
|Smoked Belly with Spare Rib Section Cut off||2,63/2,66|
|Shoulder chap or Head Jowls||1,23/1,26|
|Back Fat, Rindless||1,08/1,11|
New markets needed
In a new report, bank ABN Amro says that the country relies far too much on exports to Germany and needs new markets. They expect the export of weaners to grow by 5-10% in 2012-13.
Private partners needed for pig PR
Organisations LTO and NVV are aiming to bring new private partners to develop their PR campaign for pig farming. The main initiative is Varkens in Zicht, which allows consumers to visit pig farms.
(Source, Boerderij Vandaag)
New subsidy scheme
A new subsidy scheme for the modernisation of pig units and increase welfare needed to update them to new welfare standards has been launched. This may involve up to 40% of investment.
(Source, Boerderij Vandaag)
Planned new pig projects in Russia
According to the Russian authorities, a rapidly growing pig production due to foreign investments in Russia should be expected over the next years. Recently, the Norwegian-owned "Russia Baltic Pork Invest Grup" (rBPI) reported extensive expansion plans for the coming years. Currently the company is negotiating with the authorities in Novgorod region, on doubling the present production of 180,000 pigs. On a slightly longer term, towards 2018, rBPI wants to increase investments further to become Russia's largest pig producer with a market share of 6%. “Agro-industrial Bio-tone” has recently announced plans to build Russia's largest pig stock in the Samara region. The site will hold 480,000 pigs and annual production capacity is planned to be 96,000 tonnes of pork. The large stock is planned to be established with the support from "Russian Agricultural Bank" and the authorities of the Samora region.
(Source, Markedsnyt for Svinekoed)
Investment in advanced processing of pork
According to Artem Krestyaninov, Deputy Director of the Department of Regulation of Food markets of the Ministry of Agriculture, within the framework of the program of State support of agricultural enterprises in Russia, there will be 6 billion RUR allocated annually for advanced pork processing during the next 3 years. However, taking into account the fact that Russia is soon joining the WTO, it may turn out that the facilities built for advanced processing of pork will mainly process imported live pigs. As soon as Russia joins the WTO, the live pig import duty will drop from the current 40% to 5%. Right now a Dutch company is building a pig-breeding complex in Estonia near the Russian border, and is planning to supply live pigs to Russia as soon as the duty rate changes. China has also built several large factories in the vicinity of the Russian border that will produce sausage products. The import duty on processed products will be reduced from 20%, but will not drop below € 0.4 /kg to € 0.25 /kg. The problem the Russian pig-breeding industry is facing is high costs of pork production of currently $3/kg in Russia compared to $1.7/kg in EU. Mr. Krestyaninov stressed that pork producers should now focus on increasing the efficiency of pork production.
Quarantine in two regions of Tulskaya oblast lifted
The Governor of the Tullskaya oblast lifted the quarantine in two regions where outbreaks of ASF were registered between the end of April and the beginning of May. In both regions, Leninskiy and Zaokskiy the source of the disease had been wild boars. In order to prevent the spread of the disease all pigs from households located in the vicinity of the outbreak were slaughtered. However, during recent inspections of Tulskaya oblast pig farms, Rosselkhoznadzor detected numerous violations of the veterinary regulations in place to fight ASF. For example, there was no work done on decreasing the wild boar population, and in a number of cases failure to comply with regulations regarding sanitary conditions at slaughter and cutting of pork was registered.
Ukraine imported Canadian genetics for the first time. Details of shipment and importers are not available.
(Source, Boerderij Vandaag)
Pig population reduced
According to the national statistics Committee, as of June 1st, 2012 the pig population in Ukraine amounted to 7,706,100, which is 2.9% less than on June 1st, 2011. The number of pigs bred in pig farms and complexes amounted to 3,387,800; while the number of pigs bred in private households totalled 318,300.
Saerimmer stops investments
Saerimmer, one of the biggest pig-breeding companies in Lithuania will stop its investments in Lithuanian agriculture. Saulius Leonavichus, the director of the company, says that this decision was made due to bureaucratic impediments. Now the company will invest in the Russian economy. Mr. Lenavichus says that during the last 19 years there were no new pig farms built in Lithuania – investors had to renovate old Soviet farms.
New logo for Czech pork products
Large food manufacturers including the largest pork processors have developed a new generic private logo based on the Czech flag and the mention “Czech product – Guaranteed Czech food larder”. The meat product must contain 70% Czech pork and of course be processed in the Czech Republic to qualify. This new logo will compete against the official Czech food logo but as privately funded it will have more freedom in advertising.
(Source, Retail Info Cz)
Light and shadow
At a recent meat congress in Brasov, MADR (Ministry of Agriculture) lamented the lack of organisation in the meat chain and, in particular, the lack of market signals due to the poor interface between producers and processors. There are now 27 functioning pig abattoirs in Romania but these work at 21% capacity. The good news comes from the financial side where local Romanian banks are able to increase their lending as foreign banks have cut theirs. European funding is all important although still bureaucratic and new lending schemes have been made available to pig farmers called APIA (linked somehow to animal welfare) and PDNC. Lending can be backed by a special Guarantee Fund. The lack of such fund in the past had blocked agricultural investment. Still credit is not cheap for many reasons. VAT avoidance and VAT reform remain hot topics. Stanca Tudor Executive Secretary from the APQR (the pig producers’ association) says its 109 members represent 80% of Romanian organised pig production.
The Danish company DCH international invested in Vrancea in 2006. The leading complex of 7,000 sows, one of the top three Romanian producers, is set in a 4,000 ha arable farm which includes a feed mill with 24,000 tonnes capacity (SC Premium Pork Feed). Turnover is € 17million and the company employs 216 members of staff.
(Source, Fabrica de Carne)
Trade barriers talks
At World Pork Expo and at the National Pork Producers’ Council, the main topic of discussions is trade barriers for pork and their rising impact. Unsurprising considering than one of four US pigs is now exported.
World Meat Congress
As usual, some interesting papers were presented to this year’s event in Paris:
According to GIRA, pork prices should deflate in 2012 as pig diseases such as foot and mouth disease in Korea, African swine fever (ASF) in Russia and PRRS in China are on the wane and EU demand remains weak. In 2013, prices should rise due to the effect of the stall ban on European production. Like USDA, GIRA has revised upwards its forecasts for Chinese pork imports for 2012. Brazil and China are facing rapidly rising labour costs and Brazil must also face high costs of financing.
ASF poses the greatest threat to the world’s pork production according to Dr. Klaas Dietze of the FAO, particularly as pork production in areas of Africa where the disease is endemic expands and no vaccination exists. The disease is also becoming endemic in Southern Russia in wild pig population and backyard pigs. The recent spread of the disease was linked to the movement of military supply vehicles. The FAO believes that the threat is greater eastwards towards Kazakhstan and especially China with its huge pig population than westwards towards the EU due our greater sanitary control. Live pigs exports from the EU to Russia are expected to rise, so should European biosecurity.
Knud Buhl of Danske Slagterier presented the current state of trade negotiations. At this stage, there are 511 Free Trade Agreements (FTAs) notified to the World Trade Organisation (WTO), out of which 319 are in force. The EU has negotiated a number of FTAs including more recently with Chile and Mexico. It is finalising discussions with the Ukraine and has started discussions with India, Canada, Mercosur, the USA and Japan. Meat is often not included in these agreements that are only focused in lowering tariffs. The lack progress with the Doha round of WTO negotiations (described humorously as “temporarily dead”) explains the success of bilateral FTAs. More worrying is the increase of non-tariff trade barriers on technical, sanitary or other basis. All in all, we are facing an ever more complex trading environment.
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