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AHDB Pig Market Weekly


18 July 2013

AHDB Pig Market Weekly - 18 July 2013AHDB Pig Market Weekly - 18 July 2013

Latest figures from Eurostat show that pig slaughterings in the EU during the first four months of 2013 were 1% lower than in the same period last year.

AHDB

EU production stable in early 2013

Throughputs totalled 82.4 million head. However, with carcase weights averaging slightly higher, the amount of pig meat produced was almost identical to a year earlier at 7.45 million tonnes. Headline figures for April indicate a 6% year-on-year increase in throughputs to 21.0 million head. However, with two more working days in the month this year, this may actually represent some tightening of supplies, with the number of pigs killed per working day down 4%. Output during the month was also up by 6% at 1.90 million tonnes.

The decline in slaughterings during the first four months of the year was apparent in many of the EU’s major producing member states. Danish throughputs were down 6%, as high weaner exports continued, and the Polish kill was down 5%. Slaughterings in both France and Spain were down 2%. In contrast, pigs remained plentiful in North West Europe, with Germany, the Netherlands and Belgium all killing more than a year earlier. Italian throughputs were also higher than in January to April 2012. Provisional figures for May from a few member states suggest the trends from earlier in the year continued.

Producer share of retail price highest in years

In June, the DAPP averaged 166.8p per kg, almost 3p up on the month. At the same time, the average retail price came up by 2p. As a result, producers received 43% of the overall retail price, the highest share since the mid-1990s. Although this was little changed compared with the previous month, the year on year difference was larger, as producers received 3% more compared with the same period last year. Bacon prices for the whole of June are not yet available but the producer share of the retail price in May was 37%. This was similar to the level for the same month a year earlier as retail bacon prices have risen more over the past year than pork prices.

Almost all cuts recorded a month-on-month increase in price; fillet end leg, boneless shoulder, pork fillet and minced pork all came up by 3%. There was a smaller rise in prices for loin steaks and diced pork. In contrast, boneless legs were 1% cheaper on the month. The year-on-year comparison also generally showed increases across most of the cuts, with the monthly average up 4%. The price for traditional pork sausages was up by 9%, followed by a 7% rise for diced pork and fillet end leg. In contrast, the only fall was in the price of minced pork, which was down by 2%.

UK pig price

Favourable weather helped push up the EU-spec DAPP for the week ended 13 July. At, 168.84p per kg, the latest quote was up 0.31p on the week while producers received 18p more than the same week of the previous year. Stronger barbecue demand helped the finished pig market. In addition, relatively tight supplies also helped keep prices firm with weekly throughputs totalling 160,900 head, marginally down on a year earlier. After the dip last week, carcase weight picked up to 79.03kg. This meant that clean pigs were over a kilo higher compared with the same week last year.

The weaner price came down slightly for the first time since February this year. For the week ending 20 July, producer received £53.54 per weaner sold. Prices typically start to come down during this time of the year. As the week-on-week change was only marginal the weaner price remained £13 above year earlier levels.

For the week ended 6 July, the cull sow price increased for the sixth consecutive week, to 108.01p per kg. This was almost two pence up on the year and the recent price acceleration meant that the annual difference narrowed. This indicates firm demand from the manufacturing sector on the continent. Cull sow prices are now just under four pence below 2012 levels. The number culled during the week totalled 4,300, marginally up on the previous week although almost 1,000 head down on a year earlier. However, cullings last year were beginning to rise due to the increasing feed prices.

Brazilian pork exports down in first half of 2013

In the first half of this year, Brazilian pork exports were 11% lower compared with the same period in 2012. The majority of the decline came from a significant 61% drop in shipments to Ukraine, which was the largest buyer last year. The large decrease was due to a ban placed on Brazilian pork by the Ukrainian food inspection bodies. However, the Ukraine market has recently reopened and exports to the country are likely to bounce back in the remainder of the year.

In contrast, Russia regained its position as the primary market, with its share of Brazilian pork exports increasing from 24% to 34%. Shipments to the country increased by almost a quarter, although this is a direct result of much lower volumes recorded between January and June last year. This was the result of a Russian ban on imports of pork from some key Brazilian regions. Supplies to Hong Kong were only marginally up on last year but there were slightly higher shipments to neighbouring countries including Uruguay and Argentina. Despite a 12% rise in the export unit price, supported by the depreciation of the real, total Brazilian exports were valued at R$1.15 billion, down 1% compared with a year earlier.

Feed market update

The UK feed wheat Nov-13 futures price settled at £168.50/t on Tuesday 16 July, down by 95p on a week earlier. The Chicago Dec-13 maize futures price also closed lower over the week on 16 July at $201.08/t, down $4.33 but a recovery from the previous day’s close of $198.23/t. USDA still expects a bigger maize crop globally in 2013/14 despite a reduction from June due to decreases in US maize harvested area and in China’s maize production. Recent lower prices have been seen to stimulate demand as China made their largest purchase of US maize since 2011, due to a decline in import costs and domestic prices staying high.

There was more attention on the USDA wheat supply and demand estimates, with China buying US wheat and causing prices to increase initially. Global 2013/14 wheat production is now seen at 697.8Mt, up 1.9Mt from June and higher than 655.3Mt in 2012/13. The global consumption estimate was also increased, reflecting higher demand from China.

Soyameal prices have followed the bean trend with the Dec-13 price closing higher over the week on 16 July at $428.36/t, up $10.69. The new crop soyabean price has increased recently on the back of the worsening US crop conditions. However, there is still a bearish outlook to the 2013/14 season, depending on how the weather plays and new crop futures prices are well below the old crop prices recorded in recent weeks.

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

Pound struggling despite fresh optimism

The value of the pound has continued to fall against the US dollar and the euro in spite of recent positive figures regarding GDP growth and employment. Last week, the pound reached its lowest point since March against the euro (£1:€1.16) while dropping in value against the US dollar to its lowest point since June 2010 (£1:$1.49). Recent news that the Bank of England could keep interest rates at their current level for several more years has led some investors to remove their money from the UK markets which has hit the strength of the pound.

A devalued pound increases the cost of imports from overseas producers while making exports cheaper. This gives domestic pig producers an advantage in both the domestic and overseas markets but increases the price of feed, which is driven by global markets typically priced in US dollars. During the past 12 months, the value of the pound has fallen significantly against the dollar and the euro. This movement has impacted on the price of goods imported and exported within the agricultural markets. For example, data from the USDA shows that the drop in value of the pound against the dollar has coincided with an increase in UK red meat exports to the US. Since 2009, red meat exports have grown by roughly 10% a year with an increase of 19% in 2012. In contrast, imports of red meat from the US have fallen by 86% since 2009.

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