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AHDB Pig Market Weekly


14 March 2014

AHDB Pig Market Weekly - 13 March 2014AHDB Pig Market Weekly - 13 March 2014

The EU pig price declined steadily during February with the average for the month amounting to €160.93 per 100kg. This was around €2 per 100kg lower compared with the average for January. This is against the typical seasonal trend whereby prices across the continent normally strengthen from February onwards.

AHDB

The recent pressure on the EU pig market has been a result of the Russian import ban on EU product as a result of the swine fever outbreak especially on one of the major markets, namely Poland. Compared with the week ended 2 February the EU pig price had fallen by €12 to €155.26 by the week ended 2 March. The UK market has held up much better and although the deteriorating market on the continent has had some impact the gap compared with the EU average has further widened to €36 per 100 kg by the week ended 2 March.

Pig prices in Poland have plummeted by €26 per 100 kg in the four weeks to 2 March as a consequence of the African swine fever (ASF) outbreak in the country. There have been reductions in most of the other major producing member states albeit at a lower rate. Prices over the four weeks to 2 March in the Netherlands and Belgium were down by €12 per 100kg followed by a €11 decline in Germany. Reductions in the other countries ranged between €1 and €10. In contrast, Spanish and Italian pig prices have held up over the last month although have still eased slightly since the start of the year. Until the issue of trade with Russia is resolved the EU market outlook remains uncertain.

Lower UK pig meat consumption

Per capita pig meat consumption in the UK averaged 24.1kg carcase weight equivalent in 2013 based on supplies available for consumption as calculated by AHDB Market Intelligence. This was down by 0.7kg or 3% compared with a year earlier and the lowest since 2002. Lower supply availability and increased retail prices contributed to this development. For fresh pork, Kantar WorldPanel data indicate that the average purchase price was up 5% on a year earlier in the 52 weeks ended 5 January 2014. Lower availability contributed to the fall in beef and veal consumption which in 2013 fell for the third consecutive year to 17.3kg, down by 0.7kg on 2012. Mutton and lamb was the only meat to record an increase in 2013 as a result of higher supply and lower prices, helped by price promotions, but did not fully offset the reductions for the other two meats. Consequently, overall red meat consumption fell to 46kg per capita, down 2% from 2012.

Poultry meat per capita consumption in 2013 declined, to 31.2 kg, for the first time since 2008 but it remains the most important meat consumed in the UK. This was mainly the result of a 7% rise in the retail price and some softening of demand. A similar price increase was recorded for beef. In contrast fresh and frozen pork became more competitive given the smaller price rise. Fresh and frozen lamb was the only meat in 2013 to record a price decline, of 3%, enabling it to increase market share but it remained the most expensive meat. Total meat consumption in 2013 fell to 77.3kg, down by 1.3kg compared with 2012.

UK pig price continues to fall

For the week ended 8 March, the EU-spec DAPP edged down to 162.88p per kg, a week-on-week change of 0.20p. Falling pig prices are typical for this time of the year and the pressure on the EU pig market on the continent as of late has influenced the UK pig price to some extent. However, at the latest quote, prices remained 7p above the same week of last year. The estimated weekly slaughterings suggest that supplies are plentiful, up by around 5% year on year. The carcase weight for the week ended 8 March increased to 80.80kg. This was 0.24kg higher than in the week earlier and 0.74kg more than in the same week in 2013.

The 30kg weaner price fell to £56.66 per head for the week ended 8 March. This was marginally down on the week earlier, despite much lower volumes traded. The year-on-year comparison indicated that the weaner price for the latest week was almost £10 per head higher than the previous year’s level. Meanwhile, the 7kg weaner price dropped to £39.84 per head, down by £1.62 from the week earlier. This price fell below £40 for the first time since July last year. Reports suggest that some marketing groups did not do any trading last week.

EU production largely unchanged in 2013

Latest figures from Eurostat show that EU pig meat production in 2013 was marginally down on the previous year. This was mainly the result of a small fall (of less than 1%) in the first half of the year partly due to the stall ban reducing sow numbers, although this was partly offset by increased productivity, and higher feed costs in the back end of 2012 and early 2013. However, pig meat production in the second half of the year was on a par with 2012 levels a situation that is expected to continue in the first half of 2014 based on the latest Eurostat forecasts. The EU average carcase weight was unchanged in 2013.

For 2013 as a whole, some of the major producing member states reported reductions. In Spain, the second largest producer, production fell by 2% compared with 2012 with a similar reduction in the Netherlands. Denmark continued to export more weaners in 2013 which meant fewer pigs were available for slaughter and consequently production fell by 1% on a year earlier. In Germany, the largest producer, output was almost unchanged from 2012. In spite of fewer breeding farms there production held up well given the expansion amongst the larger and more efficient producers. Poland is also a major producer and output fell by 1% even though shortages of domestically reared pigs were largely offset by increased imports of both weaners and slaughter pigs. While there were some increases in Romania (9%) and Belgium (2%), these are relatively smaller producers and hence did not offset the decline for some of the major producers.

Pre-PEDv census showed increase in Canadian pig herd

Latest figures from Statistics Canada show that the size of the Canadian pig herd on 1 January 2014 was 1% up on the year earlier, at 12.7 million head. The breeding herd was slightly up from 1 January 2013 while the number of piglets increased by 2% year on year. This suggests a small increase in productivity. Furthermore, pigs for slaughter increased by 1% compared with the previous year partly given lower exports of weaners to the United States last year.

The data also show that the number of sows farrowing during the second half of 2013 was down 4% on a year earlier. As a result, the pig crop over the same period was also down by 4% compared with a year earlier. The latest survey was carried out before the PEDv outbreak in Canada and with the number of cases increasing this is likely to have an impact on the July survey results. By 11 March, 27 cases had been reported of which 24 were in Ontaria.

Producer share of retail price marginally lower

Based on data collected by AHDB/BPEX, the share of the pork retail price received by producers in February was marginally lower than compared with the previous month although in terms of pence per kg there was no change. This was a result of the percentage fall in the farmgate price being slightly more than the decline in the average retail price. Producers received 42% of the retail price in February which was 1 percentage point above the figure for February 2013. Bacon retail prices for the whole of January and February are not yet available but the provisional January figures suggest some increase in the producer share of the bacon price compared with December and also compared with January 2013.

The decline in the average retail price in February was the result of lower prices for most of the cuts. The largest reduction was recorded in boneless leg and fillet end leg, both down 4% on the month earlier. This was followed by a 3% fall in pork fillet and loin steaks, while the retail price of diced pork declined by 2%. In contrast, the price of boneless shoulder and loin chops increased on the month earlier while minced pork was unchanged. The year-on-year comparison showed that prices for most of the cuts also rose, with the largest being 6% for boneless shoulder and diced pork. Increases for the other cuts ranged from 3% to 5% with the exception of pork fillet, down by 1%, and a marginal fall for boneless leg.

Feed market update

Nearby UK feed wheat futures have hovered around the £164/t level since Friday 7 March. The latest USDA Supply and Demand estimates marginally increased this season’s estimated world production of wheat, maize and coarse grains. Monday’s futures for many feed grains including UK feed wheat closed slightly lower as a result, with markets looking once more to Ukraine for new developments. EU balance sheets published last Wednesday (5 March) confirmed the fast pace of EU wheat exports this season, with strong external demand helping to boost prices.

Weather factors have had a mixed impact on new season futures but traders are relatively optimistic about the 2014 EU harvest, though new season futures have still risen on the US news and with uncertainty over spring planting in the Ukraine.

Chicago May-14 soyabean futures fell by $3.67/t between Tuesday 4 March and Tuesday 11 March but Friday’s (7 March) nearby contract peak at $535.49/t set a new six month high, though it fell $14.05/t into Monday 10 March. UK soyameal values continued their upward trend as of Friday 7 March to £411/t while UK rapemeal prices fell back £5/t having risen week-on-week since January. Despite the smaller than expected downward revision of South American soyabean production, the underlying tightening of supply due to unfavourable weather will nonetheless provide support to the market, albeit at a lower price than anticipated previously.

Rising English pig herd

According to the December figures published by DEFRA, the pig herd in England rose by 6% to 3.6 million head compared with December 2012. This was largely a result of considerably higher numbers of fattening pigs which were up 7% compared with December 2012. The increase though for this category remains somewhat surprising although it is understood that some pigs that were reared in Scotland are being finished in England. It should be noted that the June 2013 survey results indicated a year on year increase of 13% in fattening pigs and yet slaughterings of pigs reared in England in the second half of 2013 were somewhat stable compared with a year earlier.

The female pig breeding herd in December fell by 2% year on year which suggests a large productivity gain given the 7% increase in piglet numbers. Sows in-pig were unchanged compared with a year earlier but gilts in pig were down by as much as 13%. The survey results also showed that maiden gilts were down by 13% on December 2012. However, at the end of 2012 considerable investments in pig production were taking place and gilt figures for December 2013 probably represent a return to a normal situation. The full UK survey results are due to be published on 19 March.

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