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QMS (Quality Meat Scotland)

19 August 2013

QMS Monthly Market Report - August 2013QMS Monthly Market Report - August 2013

QMS - Quality Meat Scotland

Prices and Supplies

Having risen steadily for 19 weeks and reached a record high of 168.8p/kg dwt in the week ending July 14th, farmgate pig prices then cooled during the second half of July. While this appears to have been a seasonal move, prices did edge back up again in the week to August 3. This meant that, at 168.3 p/kg dwt, the producer received an average price 12% higher than in the same week last year.

Prime pig slaughterings at UK abattoirs returned to their previous trend of low growth in June with 0.6% more pigs killed than a year earlier. This marked a recovery, following a 3% decline in May. Overall slaughter for H1 totalled 4.92m head, 0.3% above the H1 2012 figure of just under 4.91m head. Heavier average carcase weights pushed UK production of meat from prime pigs up 1% to 389,150t in H1.

Monthly throughput of prime pigs at Scottish abattoirs in June was broadly flat compared with May at 22,450 head. Numbers averaged 5,600 head per week in May and June; down from 6,000 in April and 6,400 in March.

Kantar Worldpanel data indicates that pork consumption volumes fell back 0.7% year-on-year in the twelve weeks to June 9. This fall came despite a more than 3% increase in spending on pork as the average cost of buying pork rose by 4%. Sales of shoulder roasts were hit hardest, declining by 16% as prices lifted by nearly 13%. By contrast, the quantity of loin roasting joints sold rose by 4% as prices only edged higher.

After decreasing in mid-July, 30kg weaners have moved higher once again. As July turned into August they traded at an average per head value of £53.75, up 21p on the week; though still 13p short of their annual peak reached 4 weeks before. Compared with this time last year the average weaner pig is selling for £14 a head more (35%). The likely driver is increased producer confidence and expectations of profitability due to the advance of finished pig prices at the same time as feeding costs have fallen back sharply.

The sow market continued to strengthen for a second month in July. Prices rose by 8.5p/kg dwt to close the month at a 13-month high of just under 115p/kg dwt. They then added a further penny as August began. With the UK sow market highly sensitive to trade developments, a higher price than last year may well reflect a much more favourable exchange rate plus rising farmgate prices on the continent.

For a second successive month Grade E pigs in the EU increased in price by around 10c/kg dwt. As a consequence, in the week ending August 4, the EU28 average stood at €1.86/kg dwt. With GB prices edging lower in Euro terms in recent weeks this has seen British farmgate prices becoming increasingly competitive. Indeed, at the beginning of August the GB premium over the EU average narrowed to just 3c/kg, from 16c/kg in the first week of July and 22c/kg two months ago. Over the past month Spanish and Dutch producers have seen prices rise 14c/kg while Italian producers have benefited to the tune of 20c/kg. On the other hand, prices have flat-lined in Scandinavia.

HMRC trade data for May shows that UK pigmeat exports grew by one-fifth over the same month last year as 14,900t was shipped overseas. This was ahead of the 13% pace of expansion in the year-to-date. Shipments of fresh product grew 16.5% over 2012, but, at 13,600t, they were at their lowest monthly level of the year so far. However, exports of cured pigmeat grew more than 80% year-on-year and reached a 14-month high of 1,300t.

UK pigmeat imports trailed May 2012 levels by 6% in May 2013. Shipments totalled 48,900t, of which 61.5% was fresh pigmeat and the remaining 38.5% was cured product. Compared with May 2012, although both types of categories were lower, there was a shift towards fresh product as its decline was less than 1% while 13% less bacon & ham was imported.

News Round up

Feed wheat prices continued to slide through July as prospects for new crops remained positive across the globe. In central Scotland, feed wheat could be purchased for £175/t delivered at the end of July; approximately 7% cheaper than a month before. Soyameal prices also eased as July closed and are now trading lower year-on-year. Prices have eased recently due to beneficial rainfall in the principal US soyabean growing regions at a key stage of crop development, plus upwards revisions to estimates of the Brazilian crop. Nevertheless, soyameal remained around £10/t more expensive than in late June as prices had increased in the first half of July a result of concerns over dry weather in the US (prior to the recent rains) and increased Chinese demand.

In Spain, 3.41m pigs were slaughtered in May, producing 282,900t of pigmeat. Both kill numbers and meat production were down by 5.5% on the year. Over the January to May period, Spanish abattoir throughput totalled 17.67m head, 1% lower than in the same period of 2012. At 1.5m tonnes, pigmeat production was down by closer to 1.5%. The average pig carcase weighed 84.5kg between January and May 2013, down from 84.9kg a year earlier.

Pig production has also fallen back in France this year. H1 figures show slaughter numbers down almost 3% on the same period of 2012 at 11.8m head. However, heavier carcase weights helped offset some of this in terms of overall production volumes, which fell by less than 2% on the year to 968,350t. Monthly figures for June were worse with declines of nearly 7% for both slaughterings and the quantity of pigmeat produced. 1.82m pigs were slaughtered, yielding 148,100 tonnes of pigmeat. This gave an average carcase weight of 81.1kg, fractionally higher than in June 2012 but 1kg below the H1 2013 average.

Data from the US Meat Export Federation (USMEF) for June showed monthly shipments of pork to be 2% lower year-on-year. The principal reason for the decline is greatly reduced access to the Russian market since February due to the high prevalence of ractopamine in US pig farming, a feed additive banned in Russia. As a consequence, exports to Russia were just 1,700t in June compared with 10,800t a year earlier. During H1 2013, shipments to Russia declined by three-quarters to 12,000t. In terms of other customers, the two largest, Mexico and Japan, both imported more from the US in June with respective annual increases of 22% to 35,100t and 6% to 32,700t. However, the third and fourth largest buyers reduced purchases. Deliveries to Canada fell 3% to 17,500t while shipments to China declined by 8.5% to 15,000t. During H1, total pork exports fell 11% to 818,500t at an average value of just over $3,000/t (£1,950/t). Mexico imported 210,500t compared with 211,000t a year earlier, placing it ahead of Japan which bought 206,800t of US pork (6% lower). Deliveries to Canada rose 2% to 103,600t, taking it into third position ahead of China, which bought 74,300t, more than a third less.

There has been an outbreak of Porcine Epidemic Diarrhoea Virus (PEDV) in the US. The virus is transmitted through faecal-oral contact or contact with a contaminated person or piece of equipment. Clinical signs are indistinguishable from gastroenteritis and it can have very high mortality rates in piglets. By the end of July, 378 cases had been reported across 15 states; although the majority of cases have occurred in just two states, Iowa and Oklahoma. No official biosecurity measures have been implemented as the disease is neither reportable to the World Organisation for Animal Health (OIE), nor the USDA. Nevertheless, industry bodies have advised producers to implement strict biosecurity measures when transporting pigs, based on research carried out since the disease initially emerged in May. The research, carried out by the National Pork Producers Council, the American Association of Swine Veterinarians and the National Pork Board, suggested that nearly one-fifth of livestock transporters were contaminated during transit, while a further 10% picked up the virus during the unloading process. The National Pork Board has so far committed $800,000 (£515,000) towards researching methods to help mitigate the spread of the virus.

August 2013

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