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AHDB Pig Market Weekly


19 September 2013

AHDB Pig Market Weekly - 19 September 2013AHDB Pig Market Weekly - 19 September 2013


AHDB

Further decline in EU pig herd

Latest figures from across Europe show that the drop in the size of the EU pig herd continued over the past year. Data for May/June are now available from countries accounting for around 80% of the EU herd and show that there were fewer pigs in every country than a year before. Overall, there were 2% fewer pigs in the EU than last summer. While breeding herds in some Member States have stabilised, or even increased slightly, across the EU as a whole sow numbers declined by 3%. The UK is one of few Member States whose census results are not yet available, with English figures expected later this week and UK aggregates next month.

Particularly sharp declines were recorded in the EU’s two largest breeding herds, with German sow numbers down by 5% and Spanish sows by 7%. With these two countries accounting for over 40% of EU pig production, this suggests that tight supplies are likely to continue into the early part of next year, at least. In contrast, breeding herds have stabilised elsewhere, for example in the Netherlands and Denmark. However, even these countries recorded small declines in their overall pig herds, while the sharpest fall was in Italy, where pig numbers were down 7%.

UK pig price

The EU-Spec DAPP increased for the third consecutive week as finished pig prices reached 169.67p per kg for the week ended 14 September. This was a week-on-week change of 0.32p per kg but the annual difference remained around 18p per kg. The recent increases in pig prices are somewhat against the seasonal trend, with supplies still tight and firm EU pig prices providing some support to the UK market, despite recent falls. At 165,100 head, throughputs were similar to the previous week but slightly higher compared with the same week last year. Carcase weights continued to rise, to 79.69kg; this was 1.5kg higher on the year.

For the week ending 21 September, weaner prices edged up to £54.15 per head. Strengthening finished pig prices in recent weeks have maintained a firm weaner market. In addition, developments in the feed market have also contributed to some producer confidence. Weaner prices remained about £15 per head above year earlier levels.

EU slaughterings hit new low in June

EU pig slaughterings in June totalled 18.8 million head, 4% lower than a year earlier and the smallest monthly kill since the expansion of the EU in 2004. With one working day fewer than last June, however, the underlying position is a more modest tightening of supply. Overall, throughputs in the second quarter of the year were down only marginally, with a 1% fall for the year to date. With carcases averaging slightly heavier than last year, monthly pig meat production was down by a bit less than four per cent, although June’s output was still the lowest since August 2009.

Throughputs in June were lower across most major producing member states, although the UK, Italy and Romania recorded increases. In line with trends from earlier in the year, the Polish kill fell most sharply, being down 9% year on year. Numbers in most other leading producers were lower by between 3 and 7%. German throughputs were down 4% in June but were still 1% higher for the first half of the year. Belgium and Italy were among other countries recording increases for the year to date.
Slaughtering figures for July are available from countries accounting for around 60% of the EU total and indicate that supplies remained tight. An extra working day meant that numbers were up 4% on July 2012 but this equates to a modest fall when the extra day is taken into account.

Danish pork exports down but weaner trade up

Danish pork exports weakened in the first half of this year compared with the same period in 2012. Volumes shipped out amounted to 544,700 tonnes, down 3% on the year. The decline came on the back of lower Danish production of pig meat. Germany (up 1%) and Poland (marginal increase) maintained their position as the main markets, with a combined share of 46% of overall exports. However, shipments to Japan and the UK fell by 17% and 7% respectively during the same period. As has been the case in the recent months, increasing demand from China also reached the Danish pig meat market, with exports rising by 58%. The value of Danish exports in the first six months of this year was down 2% to total DKK9.27 billion (€1.24 billion).

Bacon exports, predominantly destined for the UK market, were also lower during the six month period, down by 16% at 40,500 tonnes. Processed pig meat exports were little changed, on the back of increased demand from non-EU markets; shipments to the EU, mostly the UK and Germany, were down 6%.

While the meat export market has been somewhat slow, the live pig trade continued to increase and was 6% above the previous year’s level during the first half of 2013. Denmark exported 5.3 million pigs, over 95% of them weaners. Germany remained the primary market, despite a 2% fall in weaner exports, while Poland imported 46% more Danish weaners compared with a year earlier.

Feed market update

The UK feed wheat Nov-13 futures price settled at £151.25/t on Tuesday, down 2% on a week earlier. The Chicago Dec-13 maize futures price also closed lower over the week and currency movements have contributed to the fall in sterling terms. The USDA Supply and Demand report last Thursday surprised markets by increasing the US maize yield, despite expectations that the hot dry weather had been detrimental to crop prospects. However, price reaction was fairly subdued.

The Dec-13 Chicago soyameal futures price closed at $470.11/t on 17 September, up slightly from the previous week. In the UK, the Hi pro soyameal (Ex-store, East Coast) price for October delivery was £401/t, as at 13 September, down by £6 from the previous week but £13 lower than the price for nearby delivery. The rapemeal (Ex-mill Erith) price for October delivery was up £3 over the week to £184/t, as at 13 September. The USDA, in its supply and demand update last week, left world soyabean production almost unchanged, with losses in the US crop being offset by increases in South American production.

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

Italian pork imports recover from the slowdown in 2012

Italy is predominantly an importer of pork (it is the largest net importer in the EU) and in the first half of the year pork supplies entering the country totalled 463,000 tonnes. This was a 2% increase compared with same period last year. Higher pork imports, despite increased domestic production and lower exports may indicate some recovery in consumer demand for pig meat. However, shipments remained below 2011 levels. Germany maintained its position as the primary supplier, as higher production meant that its shipments were up 12% year-on-year. While Poland is a much smaller provider, its volumes were significantly higher in the first half of the year compared with 2012. In contrast, imports from other major suppliers fell as lower production reduced availability. The total value of Italian pork imports increased by 7% to total €941.2 million.

During the half year period, Italian pork exports were 14% down at 35,700 tonnes. Exports of ham, however, were little changed from a year earlier, totalling 30,400, with growth from several markets outside the EU, including the US and Japan. Italy also imports significant numbers of live pigs but shipments were down 19% in the first half of the year at 460,000 head, with weaner imports down by 21% and slaughter pig numbers by 10%.

Chile export market steady between January and July

Although a relatively small player on the global pork market, Chile has increased its presence in recent years and it is the leading supplier of EU imports, although volumes remain very small. Its pork exports again edged up marginally in the first seven months of this year, as volumes shipped totalled 72,700 tonnes. The largest proportion of exports was attributed to Japan, as the country imported a quarter more Chilean pork compared with the same period in 2012. This means that Japan imported more than South Korea, a reversal of the position for the last five years.

Shipments to Korea were down by 29% as the country recovered from the disruptions caused by FMD. Similarly, Russia reduced purchases by 15% on the year, while the EU took 17% less Chilean pork. However, higher demand from China meant that it took 16% of Chilean export supplies, more than double its share in the previous year.
Chile has a smaller import market, despite shipments increasing by more than two thirds on the year. Growth was recorded by all of the three main suppliers, the US, Canada and Brazil.

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