ThePigSite.com - news, features, articles and disease information for the swine industry

AHDB Pig Market Weekly


30 May 2013

AHDB Pig Market Weekly - 30 May 2013AHDB Pig Market Weekly - 30 May 2013


AHDB

UK Slaughterings Up in April

UK clean pig slaughtering in April 2013 totalled 945,800 head. This was around 12,000 more than the same month in 2012, partly because Easter fell further into April last year. England and Wales throughputs increased by 6% to 764,600 head, whereas Scottish numbers continued to ease; they were down on the year by almost a half again this month. Slaughterings in Northern Ireland were down by 1% on the year. The total number of sows and boars culled during April amounted to 24,700 head, just over 1% higher than the previous April.

Average Weekly UK Clean Pig Slaughter

Source: DEFRA

The average carcase weight in April was marginally down from the previous month at 79.0kg but the seasonal decline in weights has been less pronounced this year. At this weight, pigs were over a kilo heavier compared with the corresponding month in 2012 and it represents the heaviest average on record for April. The gradual increase in weight partially reflects changing processor requirements, to compensate for the lower pig numbers that are expected later in the year. As a result, pig meat production totalled 78,200 tonnes in April, just over 2% higher than a year earlier

Producers Approaching Break Even

Latest AHDB provisional estimates of the cost of pig production in May show that costs were little changed from the revised estimate for the previous month at just over 164p per kg. The estimates put costs somewhat lower than the recent peaks but they are still very high by historic standards. Compared with May 2012, costs are over 8p per kg higher, despite improvements in herd productivity which have mitigated the rise in prices.

Total Cost of Pig Production Compared with the DAPP

Source: AHDB Market Intelligence

With the recent increase in pig prices, these estimates suggest that producers are approaching the point when they will break even or even re-enter the black. However, with losses over the last two years approaching £100 million, margins will need to improve further and be sustained for the finances of the industry to recover. With some easing of feed costs in recent weeks and prospects for the forthcoming harvest still looking positive, production costs are projected to be lower during the remainder of the year. However, there is still considerable uncertainty in these figures, given the vulnerability of feed prices to weather conditions.

UK Pig Prices

The steady increase in the EU-spec DAPP continued in week ended 25 May, with the price rising by a further 0.36p to 164.39p per kg. The price has now increased for 12 consecutive weeks and is more than 3p higher than the previous record set late last year. Demand for assured British pork remains robust despite a growing gap between UK and EU prices and little sign of improvement in the weather. Supplies remain relatively plentiful too, with estimated slaughterings again higher than a year earlier, as were carcase weights, although the average weight dropped below 79kg for the first time this year. With cold stores reported to be relatively full, further increases in price may be dependent on better weather stimulating demand.

GB Finished Pig Prices (DAPP)

Source: AHDB Market Intelligence

The 30kg weaner price broke through the £50 barrier for the first time since August 2010 for week ending 1 June. It rose by 40p to hit £50.29 per head. The price has been on a steady upward trend for the last three months, with rising finished pig prices ensuring that finishers remain optimistic about future returns. Some easing of feed prices has also increased the price that they are willing to pay, with prospects for this summer’s harvest still looking broadly positive.

In contrast, the cull sow market remains much more subdued, given its exposure to the similarly depressed EU pig market. The cull sow price dropped to its lowest level since early February during week ended 18 May. The weekly average of 95.45p per kg was over a penny lower than the previous week and 8p down over three weeks. It was also around 21p lower than at the same point last year.

Bacon Benefits from Rise of Cooked Breakfasts

At the start of the recession, there was large growth in breakfast consumption in the home, as consumers tried to save money. The recession has also affected breakfast choice – more consumers are choosing their breakfast because it’s ‘filling’, in order to avoid spending money before lunch time.

Cooked breakfasts have also seen an increase over the last year, with total consumption up 4%. Bacon, which is present at nearly two-thirds of cooked breakfasts, has benefited from this trend. Over the last three years, it has seen steady increases in consumption, with growth coming entirely from weekends, which account for more than two thirds of bacon breakfasts. Sausages, eaten at just under a quarter of cooked breakfasts, have not seen the same growth. Again, weekends have shown good uplifts, but declines during the week have counteracted this.

Breakfast Consumption in the Home

Out of home breakfasts have also seen a recent increase, with a 7% rise despite a relatively sluggish foodservice market overall. The most popular out-of-home breakfasts are cooked breakfasts, hot rolls/sandwiches and pastries, meaning that both bacon and sausages have performed well. Bacon was up 12% on the year, while sausages were up 7%. There is a growing trend for consumers to eat at work, at school or ‘on the go’, so there has been a trend for convenient, easy-to-eat products being developed for this occasion.

German Import Demand Subdued

Despite German pig meat production in the first quarter of 2013 being slightly higher than a year earlier, its exports were little changed. With supplies a little tighter elsewhere in the EU, Germany shipped 3% more pork to other Member States. This was despite two of its major markets, Poland and Austria, taking lower volumes. In contrast, exports to non-EU markets were down by 9%. Key to this was a drop of over a third in shipments to Russia, with South Korea and Ukraine also taking significantly less German pork. This was partly offset by another sharp rise in exports to China, now Germany’s leading non-EU market.

German Pork Trade, January-March

Source: Statistics Germany, GTIS

With higher domestic supplies remaining in Germany, demand for imports was subdued, with shipments 11% lower than a year earlier as a result. All major suppliers were affected with only a few minor ones, such as Poland, increasing volumes. This year’s production growth was partly due to higher imports of weaners in the second half of last year. However, in the first quarter of this year, just over 2 million weaners were imported, 11% fewer than a year earlier, which could impact on production later in the year.

Feed Market Update

UK November 2013 feed wheat futures were worth £177.30 per tonne at close on Tuesday 29 May, up by £0.90 on the week. CBOT maize futures also rose and the wide spread between maize and wheat is likely to make maize globally competitive in feed rations. US maize planting progress increased from 71% to 86%, while the warm but wet weather encouraged rapid emergence, with 54% now emerged, up from 19% last week. In the UK, DEFRA released the latest UK cereals supply and demand estimates for 2012/13 last week, estimating an increase in the ending stocks of wheat to the highest level since 2009/10.

The CBOT (July 2013) soyameal price also closed higher on Tuesday 28 May. China (the largest importer of soyabeans) experienced a contraction in its manufacturing sector in May, the first time since October 2012, which could have implications for long-term soyabean demand. US soyabean planting progress remains behind average but given good conditions farmers are able to plant quickly and so the delays are not yet significant for the market.

Pig Farm Finances Worsened in 2011/12

A new report from Rural Business Research confirms the difficult financial situation facing pig farmers in 2011/12 and 2012/13. The report, based on analysis of data from the Farm Business Survey, shows that nearly a quarter of surveyed pig farms had negative Farm Business Income (FBI) during the year; almost half had negative management and investment income (MII).

The average FBI for pig farms in 2011/12 was £37,980, 15% lower than the previous year and the second consecutive year of very low returns. Nevertheless, the top 25% of farms had an average FBI of nearly £150,000. The report found a more positive position for pig breeders than for finishers and that returns were better for larger businesses. With feed prices having risen further, the report suggests that the situation will have been even worse in 2012/13, with average incomes perhaps falling by a further 50%.

May Pig Market Trends Out Now

The May edition of Pig Market Trends (PMT) was published on Tuesday. As well as the usual coverage of producer prices, slaughterings and production, trade, retail sales and prices, costs of production and other industry news, this month’s edition focuses on the productivity of the GB pig herd.

Key messages this month include:

  • Average number of pigs slaughtered per sow rose by 0.6 in 2012 and was higher still into 2013
  • Increase in productivity largely due to more pigs born per litter, 0.8 up on eight years ago
  • Efficiency of finishing also better in 2012, with improved feed conversion and daily weight gain
  • GB finished pig prices rising steadily and reaching new record levels from late April
  • By mid-May EU pig prices little higher than year earlier having eased since late April
  • Strong UK pig meat exports continue in March, with pork volumes nearly 30 per cent up on the year
  • Consumer spending on pig meat increasing and purchases recovering after slow start to year

May 2013

DOWNLOAD REPORT:- Download this report here

Our Sponsors

Partners


Seasonal Picks

The Commuter Pig Keeper - 5m Books