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AHDB Pig Market Weekly


28 August 2014

AHDB Pig Market Weekly - 28 August 2014AHDB Pig Market Weekly - 28 August 2014


AHDB

UK Slaughterings up Marginally in July

Latest figures published by Defra show a marginal year-on-year increase in pig slaughterings in July, at 969,800 head. This was the highest July monthly figure since 2002, despite recent declines in the breeding herd.

The number of pigs slaughtered in England and Wales increased by almost 1 per cent, but this rise was offset by a 2 per cent fall in Northern Ireland pig throughputs. While Scottish pig slaughterings account for a small proportion of the overall total, the July figures indicate a 5 per cent increase compared with the same month in 2013.

This is the second straight month when Scottish throughputs have increased, following nearly two years of sharp declines.

In contrast to clean pig slaughterings, the adult pig kill declined by 3 per cent compared with July 2013.

This is a likely result of lower feed prices of late, encouraging producers to retain their breeding herd. In fact, sows and boar cullings were 14 per cent down on July 2012, a time when producers were reacting to higher feed prices.

Clean pig carcase weights for July averaged 79.5kg, 2 per cent higher than the same month in 2013. Consequently, pig meat production also increased by almost 2 per cent on July 2013, to 80,400 tonnes.

EU Exports Fall in June and First Half of 2014

Latest figures for June show a 5 per cent fall in EU pork exports to 117,000 tonnes. There was a similar trend recorded for the first half of the year, as supplies fell to 720,600 tonnes, also down by 5 per cent compared with 2013. This was a direct consequence of the Russian ban, imposed earlier this year, on the back of ASF found in Poland, Latvia and Lithuania.

Prior to the ban, the EU sent almost a fifth of its exports to Russia and volumes declined from 165,600 tonnes in January to June 2013 to 17,400 tonnes this year. The EU successfully diversified into other international markets but suppliers were unable to place all of the excess volumes. Japan displaced Russia as the primary destination for EU pork exports, accounting for around a quarter of total trade in the first half of the year.

During the period, exports to Japan were up by half, to 170,100 tonnes. Overall, Asia remained the key market for EU pork exports; for example, trade with South Korea and Hong Kong strengthened by 72 per cent per cent and 17 per cent respectively. Increased competition from the US reduced supplies to China by 8 per cent but it remained the second largest market for the EU. The value of pork exports in the first half of the year totalled €1.68 billion, down 6% on the same period in 2013.

At 83,000 tonnes, offal exports in June rose by 1 per cent compared with the same month in 2013. The bi-annual figures showed the same percentage increase, as volumes reached 497,800 tonnes. China and Hong Kong are the key markets for EU offal.

In the first half of the year, exports to China increased by 6 per cent but supplies to Hong Kong came down by 3 per cent on a year earlier. There was some progress in offal supplies to the Philippines, increasing from 21,400 tonnes in 2013 to 38,200 tonnes in the first half of this year. The value of offal exports between January and June this year amounted to €547 million, down 6 per cent on the year earlier.

UK Pig Prices

The EU-spec DAPP for the week ended 23 August came down marginally, by 0.29p, to 158.06p per kg.

This is the eighth consecutive week that it has fallen, with a price decline of nearly 6p over this period as demand has been subdued while supply has generally been higher year on year. The latest pig quotation stood almost 10p below last year’s level for the same week. In advance of the short Bank Holiday week, the estimated weekly pig throughput increased by 3 per cent on the previous week to 173,900 head and was 5 per cent up on a year earlier. For the week ended 23 August, the carcase weight averaged 79.52kg, as much as 400g up on the previous week, helped by the cooler temperatures. Pigs were around 200g heavier compared with the same week in 2013.

The GB SPP for the week ended 23 August, fell to 157.86p, down by 0.41p on the week before. The APP for the week ended 16 August averaged 160.73p and was 1.10p lower than in the previous week and so a slightly larger fall than the 0.91p of the SPP for the same week, reducing the gap between the two series to 2.46p

For the week ended 23 August, the 30kg weaner price fell to £54.24 per head. This was a little over £4 lower compared with the week earlier returning to similar level of the week ended 9 August. This fall occurred despite much lower throughputs. At the latest price, breeders received £2 less for their 30kg weaners, compared with the same week in 2013. In contrast, the 7kg weaner market edged up by 0.23p on the week earlier, to £38.79 per head but was also down on a year earlier.

Liquidation of the Chinese Pig Herd Continues

China holds around half of the global pig herd but domestic production is unable to satisfy demand, so China remains a key importer of pork and its significance is increasing on the global market. Weak pig prices have left producers in a difficult financial position and let to high levels of sow liquidation. This could lead to supply shortages in the coming months, providing opportunities for exporters.
You can read more about recent developments in the Chinese market by clicking here.

EU Pig Prices Remain Subdued

EU finished pig prices have stabilised in August following a sharp fall during July. Slow demand in the European Union was the key driver of lower prices in recent weeks, although the Russian ban on imports of EU pork continued to weigh on the market. In the most recent week, ended 17 August, EU finished pig prices stood at €165.20 per 100 kg. At this level, they were over €20 below their level in the same week of August 2013, when prices were at near record levels.

For the same week, the difference between the UK and EU pig prices fell slightly to €27 per 100 kg. This is a smaller gap than has been recorded for most of this year, partly due to the euro gaining back some of the value it had lost against

Over recent weeks, pig prices in the EU have largely been subdued as a result of lower demand in the market. This situation was relevant to Germany, where summer holidays suppressed demand and prices were down by 8 per cent since the end of June, although there was a modest rise in the last three weeks. Despite some improvement in prices at the start of the holiday season, French and Spanish quotations have slipped back more recently and are well below their level last year.

Prices were also stable in most of the other key EU pig producers, following falls during July, including the Netherlands, Poland and Denmark. In contrast to other countries, Irish prices were above year earlier levels, although here too they slipped back in late July before stabilising in August.

Feed Market Update

Nov-14 UK feed wheat futures trended towards the £120/t mark throughout the last week. Despite closing somewhat stronger at £122.25/t on Friday, futures prices declined at the beginning of this week again, settling at £120.60/t on Tuesday. The Nov-14 futures seem reluctant to pass below the £120 level despite UK feed wheat prices being around £3-5/t above that of other exporters.

In the latest EU Crop Monitoring Report, released on Monday, the EU Commission pointed to very strong maize yields across the EU. Nov-14 Paris maize futures settled at €151.00/t on Tuesday, a fall of €2.75 on the previous week and a new contract low. Dec-14 Chicago maize futures closed at $143.70/t on Tuesday, a fall of $2.85 on the previous week.

Very strong demand for US soyabeans and higher than expected crushings and export sales provided some short term support to prices against the backdrop of an ultimately bearish market. While nearby Chicago soyabean prices increased by almost $20 during last week, they have declined again this week, settling at $395.14/t on Tuesday. New crop Nov-14 Chicago soyabean futures reached a new contract low on Tuesday, settling at $377.69/t. UK soyameal (Hi pro, ex-store East Coast, August delivery) was £341/t on 22 August, up by £11 on the previous week. UK rapemeal (34%, ex-mill Erith, August delivery) was £163/t, also up on the previous week, by £3.

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

Russian Ban Provides Opportunity for Brazilian Pork

This month’s Russian announcement that it is banning imports of most food and agricultural products from, among others, the EU, US and Canada, has focused attention on the Brazilian pig industry. Brazil is now the only major global pork exporter with access to the Russian market. Will it be able to fill the gap left by other suppliers and what will that mean for the global pork market?

To find the answers to these and other questions, read our analysis of Brazilian trade patterns by clicking here.

Irish Exports Strengthen Despite the Russian Ban

Latest figures show strong Irish pork exports in the first half of the year, totalling 71,400 tonnes. This was up 15 per cent from the previous year and the highest bi-annual figure in records back to 1997. Irish pork exports are primarily destined for the EU market, accounting for around 60 per cent of total trade. The UK is the key market for Irish pork exports and trade increased by 5 per cent year on year. Exports of processed pig meat products to the UK also increased. Similarly, there was a strong growth in exports shipped to Denmark, likely for re-export. However volumes supplied to Germany came down by 15 per cent.

Outside the EU, the Asian markets strengthened their position among Irish pork sales, while supplies to Russia fell from 8,600 tonnes to 1,300 tonnes in the first half of the year. Pork volumes exported to Japan rose from around 1,000 tonnes to 6,500 tonnes in the latest period, with a similar rate of growth in shipments to South Korea and the Philippines. Shipments to the US also increased sharply, while China, the leading non-EU market, took 7 per cent more Irish pork. Overall, the value of total exports during the first half of the year reached €171 million, up 17 per cent from a year earlier.

DOWNLOAD REPORT:- Download this report here

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