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AHDB Pig Market Weekly


21 November 2013

AHDB Pig Market Weekly - 21 November 2013AHDB Pig Market Weekly - 21 November 2013

Earlier this week, AHDB/BPEX published the 2012 edition of its series of annual reports comparing costs of pig production internationally. The report is based on data from InterPIG, an international group of pig economists.

AHDB

GB production costs still higher than rest of EU

As in previous years, the report shows that costs in Great Britain were higher than in most other major producing countries, including all of the main suppliers of pork to the UK. At 153p per kg, GB costs were 7p above the average of the EU members of InterPIG and nearly 20p higher than in Denmark, France, the Netherlands and Spain. Costs were lower still in Canada and the US, which could have long-term implications, given current Free Trade Agreement negotiations.

A number of factors contributed to the higher costs in Great Britain; more expensive feed and lower slaughter weights had a part to play. However, the most important factor was low sow productivity. Overall, the number of pigs weaned per sow per year, at 22.8, was the lowest of the countries covered in the report; the EU average was 25.4. Our unique outdoor breeding system contributed to this but even GB indoor sows were less productive than the average. The main reason for our low productivity is small litter sizes. At 11.5 piglets, our average litter was well below the Danish average of 15.1 and more than one piglet below the EU average of 12.7. Even our indoor figure of 12.1 was below par.

On a brighter note, performance of the GB rearing and finishing herds was at or better than the EU average. Even so, there is some room for improvement, with the Dutch achieving significantly better feed efficiency than the British.

A copy of the full report, along with previous editions, can be downloaded by clicking here.

UK exports still performing strongly

UK pork exports continued their strong performance in September, 9% above 2012 levels. At 17,200 tonnes, this was the highest monthly figure since 2000. The ongoing tight supply situation elsewhere in the EU continued to create opportunities for UK exporters. As with the previous month, Ireland overtook Germany as the leading destination. Denmark also received significantly more pork, with September shipments around 4 times 2011 levels. While China imported 60% more UK pork than last September, volumes to Hong Kong fell by almost as much, meaning that total exports to the Far East were little changed on the year. Sausage, bacon and processed pig meat exports all rose on the year, although they comprised only a small proportion of overall pig meat shipments. Offal exports continued their recent year-on-year decline, despite increasing demand from both China and Hong Kong, due to continued weakness in European offal demand.

The UK imported 200 tonnes less pork this September compared with a year earlier, a smaller decline than seen over the last few months. Most major suppliers increased shipments to the UK, other than Denmark and Ireland who both reduced shipments following lower production. Germany was again the principal source. Imports of cured pig meat increased, with Denmark strengthening its position as the UK’s prime supplier. Imports from the Netherlands continued to slowly decline, though the two together still accounted for over 80% of bacon and ham imports. Sausage imports were marginally down on last year, as they were last month. Imports of processed pig meat fell on the back of fewer Irish imports, only partially offset by increased Polish shipments.

UK pig prices

The EU-spec DAPP fell by 0.62p for the week ended 16 November, to 171.35p per kg. Normally a seasonal uplift would be expected in advance of the year-end festivities but the availability of cheaper priced pork on the continent is possibly having some impact and some contracts are being re-negotiated. As a result, the annual difference in finished pig prices has narrowed to 11p per kg, the smallest year on year increase since last October. The weekly estimated slaughterings in GB totalled 168,900 head, down 4,200 on the previous week and a slightly larger decline compared with the same week last year. Carcase weights also fell, albeit marginally, to 80.31kg but this meant that the pigs were still almost a kilo heavier compared with the same week in 2012.

The price of an average 30kg weaner moved up by over £2 per head to £57.51 per head for the week ending 16 November 2013. This probably reflects some change in the mix of animals in the sample rather than a marked strengthening of the market. As a result of the switch to historic price reporting adopted at the beginning of November, prices are likely to be somewhat more volatile compared with the old series. The price was almost £13 higher than a year earlier and also at its highest level so far in 2013. On the other hand, the weekly average of a 7kg weaner declined to £42.37 per head for the same week, down by £1 on the previous week.

Slow export market for Canada and the US

US pork trade weakened in the period between January and September, with exports down 11% on a year earlier. However, at 1.1 million tonnes, they were almost at the same level as in 2011. Mexico and Japan each accounted for 28% of overall trade in the nine month period. Shipments to Mexico increased marginally on the year, whereas exports to Japan were down by 5%. The US was the primary supplier to China but the requirement that pork be certified Ractopamine-free meant that the US exported 28% less pork to this market. Amongst smaller markets, shipments to Canada and South Korea were also reduced by 11% and 33% on the year, while exports to Russia have ceased in recent months due to a Russian ban because of concerns over Ractopamine. The third quarter figures show a similar picture overall, with a decline in shipments of 6% on the year. However, supplies to Mexico were 6% higher compared with the same quarter in 2012 with rising incomes likely to be the main reason for the recent uplift in import demand.

Canadian pork exports were also subdued, remaining almost unchanged in the first nine months of this year at 664,300 tonnes. Exports failed to grow despite a relatively weaker Canadian dollar in recent months. Shipments to Canada’s primary market, the US, increased by 13% and demand from China came up 63% while Mexico took 59% more. However, these increases were offset by reductions in the Japanese (down 17%) and Russian (down 59%) markets. Live pig exports from Canada during the nine month period fell to 3.9 million head, down 9% on the year. Given that almost all of the pigs are shipped south of the border, the same drop was recorded in US imports of live pigs.

Feed market update

The Nov-13 UK feed wheat futures price closed at £164/t on Tuesday, unchanged compared to the previous week. The Dec-13 Chicago maize futures price settled at $164.47/t on Tuesday, up from Monday’s close of $162.20/t which was the lowest closing price since July 2010. However, Tuesday’s settlement price represents a decline of $5.71 on the previous week. Global grain markets remain on a downward trend as US farmers wrap up the record maize harvest. Better US wheat crop conditions for harvest 2014, compared to the 2013 crop, suggest that prices could generally stay on a downward trend but there is still a very long way to go.

The Dec-13 Chicago soyameal futures price closed at $450.73/t on Tuesday (19 November), a considerable decrease on $471.46/t of the previous week. In the UK, the Hi pro soyameal (Ex-store, East Coast) price for November delivery was £375/t as at 14 November. With the US soyabean harvest nearing completion and South American plantings reported to be going well, the global soyabean market will most likely be driven by demand, unless anything radical happens to South American weather. Chinese traders currently estimate the country’s soyabean imports at a record this year especially if global prices remain lower.

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

Non-EU markets sustaining Irish exports

Irish pork exports, at 98,500 tonnes, were 2% lower through the year to September than over the same period last year, due to a weaker performance earlier in 2013. Although production was slightly below last year’s levels, increased demand after Russia stopped importing pork from some major suppliers helped Ireland export more pork than last year during the third quarter. This contributed to the gradual rise in the proportion of Irish pork exports destined for non-EU markets; in the third quarter, nearly half of exports left the EU. If Ireland retains its Russian market share and exports to China continue to rise, EU markets may continue to decline in importance for Ireland. Nonetheless, the UK received 35% of Irish exports during the period, more than Russia and China combined.

Imports also reversed their trend during the third quarter, increasing 30% over the year to date but decreasing 8% over the July to September period. Shipments recorded from the UK more than doubled, although UK trade statistics show little change in shipments, albeit at a higher level. Though still higher on the year, second and third quarter recorded imports from the UK were far lower than first quarter shipments. With lower imports and export demand picking up, Irish pig prices rose consistently from the beginning of July, bringing them closer to the European average.

Food and Farming Minister to speak at AHDB Outlook 2014

Food and Farming Minister George Eustice will address representatives from the beef, lamb, pork and dairy supply chains when he opens the AHDB Outlook 2014 conference in February. Mr Eustice will deliver the opening address at the conference, jointly hosted by the three livestock divisions of the AHDB − BPEX, DairyCo and EBLEX – together with AHDB Market Intelligence (MI) at One Great George Street in Westminster on Wednesday, 12 February 2014.

The programme will explore factors that will affect businesses in the three sectors, including supply chain matters, international trade developments and how the UK industry can respond to emerging opportunities and threats. In the plenary session, Warren Anderson, Vice President, Supply Chain for McDonald’s UK, will look at how the supply chain for livestock products has responded to the challenges it has faced over the last 18 months and what this will mean for the future. Richard Brown, Director of GIRA, will speak about how Free Trade Agreements and other international trade developments affect the UK industry.

Separate breakout sessions will follow, with one of the sessions covering the outlook for the pig sector, including the latest AHDB/BPEX supply forecasts, and, for the first time, an overview and outlook for the poultry sector.

To book your place at the conference, please click here.

DOWNLOAD REPORT:- Download this report here

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