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AHDB Pig Market Weekly


26 September 2013

AHDB Pig Market Weekly - 26 September 2013AHDB Pig Market Weekly - 26 September 2013

Results of the June Agricultural Survey for England were published last week. The figures show that the English breeding herd decreased over the last year, although the June figures do represent some recovery for the low point recorded in December.

AHDB

English breeding herd smaller than last year

A sharp drop in the number of in-pig sows and gilts suggests that the number of piglets born over the summer will have remained constrained. In turn, this implies that pig supplies will remain relatively tight for the rest of this year. In contrast, the number of maiden gilts rose, continuing a long-term trend driven, in part, by a greater producer focus on replacing sows to ensure herds are younger and more productive.

While the results for the breeding herd are broadly in line with expectations, the figures for the number of fattening pigs are unexpected. They show a significant increase, with over 400,000 extra pigs compared with a year earlier. With the breeding herd declining during the second half of last year, this seems unlikely. Many of these pigs would have come to slaughter since June but no upturn has been apparent; Defra figures show that English clean pig slaughterings between June and August were 5% up on a year earlier but this is largely due to more Scottish pigs being killed in England.

Census figures for Northern Ireland were published three weeks ago and data for Scotland and the UK as a whole are due to be published next month.

Cost of production falls further

Latest AHDB/BPEX provisional estimates show that the average cost of pig production fell further in September as spot feed prices continued to ease. During the month, average costs were estimated to be 147.2p per kg, their lowest level since December 2011 and over 6p lower than in August. As well as the reduction in feed prices, a combination of increased sow productivity and better feed efficiency has reduced the amount of feed used to raise each pig.

With pig prices currently around 170p per kg, most producers will be receiving more for the pigs they sell in September than they will be paying out for feed and other costs during the month. However, the pigs being sold during September will have been fed during a period when feed was more expensive. Estimates suggest that the lifetime cost of producing these pigs is around 10p per kg more than the quoted cost of production for September (which is based on the spot price for feed during the month). While this is still below the pig price, it emphasises that it will take some time for producers to recoup the losses they have experienced in recent years.

UK pig price

For the week ended 21 September, the EU-spec DAPP marked a new high, passing 170p for the first time to reach 170.51p per kg. This was 0.84p up on the previous week. The recent increases in finished pig prices reflect tight supplies experienced in the UK and have come despite some easing of EU prices of late. At the latest quote, finished pig prices were 17p per kg above the same week in 2012. Estimated clean pig slaughterings picked up from the previous week to 169,800 head. This was 4,000 head higher than the same week last year and was also the highest weekly slaughter this year. Carcase weight edged up again to just over 80kg. This was over half a kilo heavier than the previous week and almost 2kg higher compared with the same week in 2012.

Weaner prices were almost unchanged on the previous week at £54.18 per head. The market for young pigs is still somewhat sluggish despite a more promising feed market. Nevertheless, prices remained at a three year high and, in the latest week, the weaner price was £15 above year earlier levels.

Tight UK supplies continue in August

UK pig supplies remained somewhat tight in August, with total slaughtering at 770,900 head. This was 1% down compared with the same month in 2012. The shortfall was exacerbated as a result of disruptions at individual processing plants for two weeks during the month. England and Wales throughputs were again up year on year, by 4%, following the plant closure in Scotland last year. The number of pigs that entered abattoirs in Northern Ireland came down by 1% on the year. The number of sows and boars killed in the UK during August was down 11% on a year earlier. Last year, cullings were inflated in response to the high feed prices at the time.

As has been the case all year, clean pig carcase weights were higher in August than a year earlier. On average, pigs were about 900g heavier compared with the same month last year. Feed prices have eased from the high during the second half of 2012 and this has encouraged producers to add the extra weight onto their pigs. The net result was that pig meat production in August totalled 63,400 tonnes, marginally down on the previous year. Cumulative production for the first eight months was just under 1% above 2012 levels at 550,500 tonnes.

Pork export growth continues in July

Latest figures published by HMRC show that UK pork imports in July were down 3% on the year. Germany maintained its position as the primary supplier from last July, with a year-on-year increase of 10%. Dutch pork into the UK was up by almost a quarter but a 25% reduction in Danish supplies more than offset these increases. Imports from Ireland were down by 6% compared with July 2012. In contrast, bacon and ham imports increased by 2% on the year. Growth was mainly driven by a 19% rise in Danish supplies. Sausage imports during the month increased by 18% on the year while other processed pig meat imports were almost unchanged.

UK pork exports, on the other hand, rose sharply at 15,000 tonnes, a year-on-year increase of 23%, continuing the trend of the year to date. Germany remained the main market for the UK but purchases fell 3% on the year. Ireland imported 10% more UK pork but growth was mainly driven by increased frozen exports to Greater China. There was also good growth from several smaller European markets. With unit prices up 4%, the value of UK pork exports during the month rose by more than a quarter year on year, to £17.9 million. Bacon and processed exports in July were down on the year. Pig offal exports also weakened in July, down 5% from the same month in 2012. While demand from China, Hong Kong and Thailand was firm, exports to other EU countries suffered.

Feed market update

The UK feed wheat Nov-13 futures price closed at £153/t on Tuesday, up 1.2% on the week, while the Chicago Dec-13 maize futures price closed lower over the week at $176.67/t, due to seasonal harvest pressure as the US maize harvest progresses. The Chicago Dec-13 wheat futures price closed at $241.84/t on Tuesday, a weekly increase of 2.4%, due to strong export demand and news of the Argentine wheat crop being threatened by early spring frosts.

The Dec-13 Chicago soyameal futures price settled at $454.48/t on Tuesday, down 3.4% on the previous week. As expected, this has followed the direction of the soyabean futures price as the US harvest gets underway and is expected to gain momentum in the next few weeks. In the UK, the Hi pro soyameal (Ex-store, East Coast) price for September delivery was £404/t as at 20 September. Although not directly comparable, in nearby terms the price is down £10 on the previous week. The rapemeal (Ex-mill Erith) price for September delivery was down £1 over the week to £183/t, as at 20 September.

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

September Pig Market Trends out now

The September 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 results of the latest pig censuses from the UK and EU.

Key messages this month include:

  • Pig prices ease back during August but rising again in September, hitting new record highs
  • Average weaner price in August at three year high but market finely balanced over summer
  • EU pig prices strong through August, peaking above last year’s high but dropping back in September
  • EU pig supplies remain tight in June and July, with most Member States killing fewer pigs
  • Overall fresh meat sales hit by hot summer weather, with roasting joints hit particularly hard
  • Sales of barbecue products, notably burgers/grills, and picnic items, such as ham, higher during heat wave
  • Cereals prices still falling but soyameal market more volatile, encouraging South American soya plantings
  • EU herd drops further in year to June, with big falls in German and Spanish sow numbers

DOWNLOAD REPORT:- Download this report here

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