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AHDB Pig Market Weekly


05 July 2013

AHDB Pig Market Weekly - 4 July 2013AHDB Pig Market Weekly - 4 July 2013

Latest figures from the Federal Statistics Office show that overall German pig numbers totalled 27.4 million head in May. This was a 2% fall compared with the same period in 2012 and was mainly a result of a declining breeding herd.

AHDB

German breeding herd lowest for several decades

The number of sows in May 2012 totalled just over 2 million head, down 6% on the year. This means that the German breeding herd is at its lowest in several decades. The impact of the new EU welfare regulations is evident in the new figures, which also showed a large fall in the number of farms that had breeding sows. Many small scale holders were forced out of business as they were unable to afford the high costs of conversion to group housing at a time when input costs were high. Although there was a small increase in holdings with more than 500 sows, this rise failed to offset the large decline from the smaller farmers.

Despite the large fall in the breeding herd, higher productivity meant that the number of piglets was only 2% lower at 8 million head. However, weaner numbers fell more sharply. While production has remained strong in the first half of the year, the recent results indicate some pressure on pig supplies for the rest of this year and the start of 2014. It remains to be seen whether this pattern will be replicated in other member states, whose census figures will be published in the coming weeks.

More details of CAP reform agreement

As reported last week, the European Parliament, Commission and Council have reached a political agreement on reform of the Common Agricultural Policy. Full details of the deal are yet to emerge on all points and some elements remain to be agreed. The changes which have been announced do not appear to have a significant direct impact on pig production, although there will be impacts on producers who own land or have mixed enterprises.

AHDB Market Intelligence has now produced a briefing note outlining the key aspects of the reform. Click here for more.

UK pig price

The EU-spec DAPP averaged 168.18p per kg for the week ended 29 June, up 0.74p on the week. The DAPP has increased each week since the beginning of March with an overall rise of over 12p. Price increases during this period of the year is normal with the barbecue season helping to boost demand. For the latest week, the DAPP was 18p above year earlier levels. Tighter supplies may have also played a part in the firming of the price and estimated throughputs, at 146,700 head, were 8,800 less than in the previous week and 10,000 lower than a year earlier. The unusual large drop last week was partly due to a plant closure for refurbishment. Carcase weights increased from the previous week to average 79.03kg, over a kilo heavier than a year earlier.

For the week ending 6 July, the weaner price reached £53.23 per head, almost a pound up on the previous week. Recent increases are resulting from stronger producer confidence on the back of both developments in the grain markets and increased pig prices. The year on year increase in the weaner price has now reached almost £11 per head.

The sow market moved up again in the week ended 22 June to 103.23p per kg. This was over a penny higher than the previous week. This time last year, prices were generally on a downward trend as high feed prices encouraged sow culling. Therefore, recent price increases have meant that the yearly price differential has closed to 13p below 2012 level. This was the narrowest gap so far in 2013.

Price increases support spending growth across pig meat categories

In the 12 weeks to 9 June, consumer spending on pork was 3% higher than last year, according to figures from Kantar Worldpanel. This growth was driven by price increases, with consumers spending more on chops/steaks and loin roasting joints. The amount of pork purchased, however, was 1% behind last year. The decline was heavily influenced by consumers buying smaller amounts per shop; this was seen across all cuts expect loin roasting joints and marinades. Pork continues to be impacted by shoppers switching to lamb to take advantage of deals, but has benefited from shoppers purchasing fresh meat instead of ready meals and burgers/grills.

The value of bacon sales increased slightly compared to last year, although the amount purchased fell 2% due to shoppers buying less often. Bacon joints saw the largest declines but steaks performed well, with an increase in promotions attracting consumers away from other cuts. Spending on sausages was also ahead of last year, up 8%, again driven by price increases, as the volume purchased dipped 4%. Fewer consumers purchased sausages and those that did bought less often, although shoppers again traded into premium lines from standard. Sliced/cooked ham saw increases both in spending and in the amount purchased, with loose ham, in particular, contributing to spending gains.

Looking at the figures for the last four weeks, pork continued to show a fall in purchases, although leg roasting joints performed exceptionally well, driven by promotions within some of the major retailers. Bacon purchases fell 3%, with declines across all cuts. Purchases of sausages have also struggled, but spending remained positive, boosted by average price rises of 15%.

EU pig prices turn up

Having been stable through the first quarter of the year and then falling into May, EU pig prices have finally gained some upward momentum. By week ended 23 June, the EU average price had put on nearly €10 in three weeks to stand at €174.88 per 100kg. This was the highest price recorded since early December 2012 and was €7 higher than in the equivalent week last year. The upturn has come as better weather has stimulated some improvement in demand while export markets are performing a little better than earlier in the year. Nevertheless, with the EU economy still weak, the market remains finely balanced and further price increases won’t be automatic and will be partly dependent on weather conditions.

Prices in most major producing member states followed a similar trend to the EU average, with prices rising by between €5 and €15 per 100kg over the latest four weeks. The largest rises were in France and Italy. Prices in France tend to be more volatile than elsewhere in Europe, while Italian prices have now started to bounce back following sharp falls in the spring due to weak consumer demand. The key German price matched the EU average by increasing by €10 in the latest three weeks. With UK prices rising more slowly than the average, the premium over the EU average had decreased to €16 from €23 a month earlier.

Feed market update

UK new crop feed wheat futures closed on Tuesday at £165.25/t, down £2.25 on a week ago, after a continuous decline during the week. The Chicago new crop maize futures price (Dec-13) also dropped on the previous week. The USDA stocks report showed maize stocks as at 1 June down 12% compared to the same time last year, suggesting that there will be a high level of reliance on the volume and timing of the US maize harvest. This season has seen late maize plantings but the USDA report shows that US farmers have sown the highest maize area since 1936, thus forcing prices lower.

The USDA reported that US soyabean stocks as at 1 June decreased by 35% on the same period last year and the lowest stocks level since 2004. This led to an increase in the nearby Chicago price (Jul-13). In contrast, the new crop price decreased as US farmers were reported to have sown a record area to soyabeans. The medium to long term outlook for the global soyabean market remains bearish, given the favourable US crop prospects.

To read more about the latest developments in the feed market click here.

Croatia joins the European Union

Croatia became the 28th member state of the European Union on Monday, a decade after it applied. The country has a modest pig sector and accounts for less than 1% of total EU-28 pig meat production. However, it will be interesting to follow the Croatian pig industry to see the impact of EU regulations, especially since the majority of the country’s pig producer operate on a small scale.

During the first quarter this year, Croatian pork imports totalled 10,200 tonnes, similar to the previous year’s level. This was a result of stable pig meat production during the first three months of this year, which also indicated steady demand for pig meat in Croatia. As the two main suppliers, Germany and the Netherlands shipped 5% and 14% more compared with the same period a year earlier. However, lower imports from many smaller providers, including Spain and Austria, offset these higher supplies.

More information about the Croatian pig market can be found in our country report.

DOWNLOAD REPORT:- Download this report here

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