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AHDB Pig Market Weekly


10 May 2013

AHDB Pig Market Weekly - 9 May 2013AHDB Pig Market Weekly - 9 May 2013


AHDB

Consumers Spending More on Pork

In the 12 weeks to 14 April, consumer spending on pork increased 4% on a year earlier, according to the latest figures from Kantar Worldpanel. Over the same period, the amount of pork purchased declined 2% as higher prices led consumers to switch to fresh lamb, which has been heavily promoted. Pork loin joints continue to perform strongly, with sales up 40%, supported by a continued increase in household penetration. Most other cuts suffered volume and value declines.

Bacon and sausages followed a similar pattern as expenditure increased but amounts purchased dipped. Sales of bacon rashers and steaks, however, were up on the year. An 11% price rise meant that sausage purchases declined 6% year on year, with fewer people buying them and buying smaller amounts. Sliced cooked ham purchases remained similar to last year but a small decrease in average price resulted in expenditure being 1% lower than a year earlier.

Annual Percentage Change in Retail Meat Purchases
(12 Weeks to 14 April 2013)

Source: Kantar Worldpanel

In the latest 4 weeks, the picture for pork looked more positive, with purchases up 1% year on year and spending up 4%. Contributing to volume growth were loin and leg joints and marinades. Spending on bacon was fairly flat but total purchases recorded a slight uplift due to strong performance from steaks and rashers. Meanwhile, sausage sales continued to decline but spending increased, driven by price inflation. Sliced cooked ham purchases declined 3% over the period, while the expenditure decline accelerated to 5%.

EU Pig Prices Subdued

Average EU pig prices have been largely stable in euro terms since mid-February, fluctuating around €172 per 100kg. The monthly average for March was €7 more than a year earlier due to tight supplies. Prices typically rise at this time of year as consumer demand picks up with rising temperatures. However, cold weather across Europe in March limited demand while some key export markets were also subdued. The relative price stability continued into April but the average fell slightly during the month and by week ended 28 April stood at €170.21 per 100kg.

EU Average Pig Reference Price

Source: EU Commission

The stability seen in the EU average price was also apparent in North West Europe, including Germany, Denmark and the Netherlands, although the German price fell in the latest week. However, having been on an upward trend until mid-March, prices in France and Spain have since eased back a little. Spanish prices are still the highest among major producers at over €190 per 100kg. In contrast, Italian prices have fallen sharply since mid-February, dropping by over €30 in eight weeks, due to a sharp fall in consumer demand for specialist products.

Since mid-March the UK price has risen steadily in euro terms, with the strengthening pound against the euro adding to rising sterling prices. As a result, having closed to less than €2 in early March, the gap between the UK and EU reference prices had opened to over €14 by the end of April.

GB Pig Prices

For the week ended 4 May, the EU-spec DAPP reached 162.46p per kg, up by more than a penny over the week. The finished pig market has remained strong with the DAPP consistently increasing since the first week of March. This comes despite a subdued EU market, suggesting an increasing preference for British pigs. At the latest quote, pig prices were 14p above last year’s level for the same week. Pig numbers remained plentiful, with throughputs estimated at 164,500 head. This was 6,800 head up compared with the same week in 2012. The average carcase weight for the same week fell marginally to 79.05kg.

GB Cull Sow Prices

Source: AHDB Market Intelligence

The relatively weak EU pig market is beginning to have an effect on cull sow prices, with quotes falling in key EU countries as supplies remain relatively plentiful. This is starting to have an effect on GB prices, with the average falling by 0.69 to 103.49p per kg for week ended 27 April. This was still around 18p lower than last year, with the weaker pound contributing to the fall, despite some recent strengthening. Throughputs remain at around 5,000 head per week, close to their level in early 2012.

Despite the strong DAPP as of late, the weaner market remains well balanced with the latest price for the week ending 11 May unchanged at £49.56 per head. Stability in the weaner market is a factor of producer expectations as there is some uncertainty surrounding both pig and feed prices in the coming months. However, the annual difference remains positive with a gap of £4 per weaner compared with a year ago.

Russian Imports Affected by Trade Restrictions

In the first quarter of 2013, Russia imported 10% less pork than in the same period last year. However, a number of restrictions placed on shipments from various countries have led to a significant shift in the mix of suppliers. Last year, a ban on pork imports from three Brazilian states was still largely in force. As a result, Brazil lost its place as the leading supplier of imported pork to the Russian market. This year, it resumed that position, with shipments more than double last year’s level, although they were still well down on the first quarter of 2011. Among smaller suppliers, Chile also doubled its shipments as did several EU providers.

Russian Pork Imports, January - March

Source: Customs Committee of Russia, GTIS

This year, trade restrictions have affected imports from the US, Canada, Ukraine and, to a lesser extent, Germany, all of which were substantially lower than last year. The US was perhaps the worst affected, with its shipments less than half their level a year earlier due to Russian concerns about Ractopamine. Shipments from the EU were also lower, down 20% overall, largely due to a rise in unit prices, which were up 8%. All the major EU suppliers were affected to some extent.

Feed Market Update

UK wheat futures declined slightly over last week, closing at £191.25/t on Tuesday, down £2.25 on the previous week. The UK wheat price has mainly followed the direction of global grain prices which have decreased, following an improved US weather forecast. Only 12% of the US maize crop had been planted by 5 May but improved weather is expected to allow plantings to make up for lost time.

Brazilian soyameal prices into Liverpool have remained unchanged over the week, in line with the expectation of increased South American supplies. South American soyabean export shipments are now speeding up and are estimated to reach 9.3Mt in April. US soyabean plantings were 2% complete by 5 May, behind the same time last year. However, there is still talk of intended acreage switching from maize to soyabeans.

Japanese Imports Continue to Decline in First Quarter

Latest figures for Japanese imports show another decline, continued from the last quarter of 2012. Between January and March, Japanese pork imports declined by 9%, with a total of 179,600 tonnes. The majority of the contraction resulted from lower exports from the three main suppliers. The US and Canada reduced shipments by 16%, while the fall from Denmark was 6%. Together the three markets deliver 74% of total imports. Lower production and hence lower availability for export markets were a factor for Denmark and Canada.

Japan Pork Imports, January - March

Source: Japan Customs, GTIS

In addition to the supply factor, the weaker yen since the start of the New Year also played a part. With the gate price fixed in yen terms, this meant unit prices available were significantly lower in dollar or euro terms, reducing the attractiveness of the Japanese market to exporters. Nevertheless, imports from Mexico increased by 8% to 28,000 tonnes as a higher number of facilities to ensure safety and quality of meat exported to Japan were approved. Chile and a number of other EU countries are also expanding into the Japanese market, partly filling the shortfall left by the country’s primary suppliers.

May 2013

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