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AHDB Pig Market Weekly


06 October 2014

AHDB Pig Market Weekly - 2 October 2014AHDB Pig Market Weekly - 2 October 2014


AHDB

EU Breeding Herd Up For First Time in Nearly a Decade

Figures from the May/June agricultural surveys carried out in the major EU Member States show an increase in the pig herd and, for the first time in nearly a decade, there was also an increase in the breeding herd. Many of the smaller Member States only carry out surveys in December but those which do a summer one cover over 90% of the pig herd.

Therefore, these results should hold for the EU as a whole. The total pig herd in the EU Member States carrying out a survey increased by 1% to 131.6 million head in the year to June 2014. However, the herd was still smaller than in 2011 or 2012, since when the industry has been impacted by new welfare regulations (including the partial sow stall ban) and high feed prices. With both these issues now in the past, however, the herd has been able to stabilise.

More significant in a historical context is the rise in the EU breeding herd. The number of sows increased by nearly 1% compared with June 2013. Although the list of countries conducting a June survey has changed over time, this appears to be the first rise since 2005. Certainly, the December figures for the whole EU have declined every year since 2006. The four largest breeding herds, Spain, Germany, Denmark and the Netherlands, all recorded increases in the latest year.

Growth was most obvious in Spain, where there were 5% more sows than a year ago, confirming its position as the EU’s largest pig breeder. Relatively low input costs and high pig prices mean that Spanish producers have been in a better financial position than those elsewhere, encouraging them to expand.

September US Pig Numbers Down

According to the latest figures published by USDA, the number of pigs on 1 September totalled 65.4 million head. This was down by 2% compared with the same point in 2013 but was 6% up on the previous quarter. The fall was a direct result of a 3% decline in the number of pigs available for slaughter, due to the lingering impact of the PEDv outbreak.

Amongst slaughter pigs, the largest decline was recorded in the heaviest weight band, which would have been born around the time when PEDv cases peaked, where numbers fell by 6% year on year.

Despite a 2% increase in the US breeding herd, piglet numbers were down by 2% compared with September 2013. However, this indicates a slowdown in the number of piglets affected by the PEDv outbreak, as the piglet counts in March and June were down by 8% and 6% respectively, compared with a year earlier.

The June-August pig crop fell by 1% to 29.5 million head; the number of sows farrowed was up by 1% at 2.91 million head but the number of pigs weaned per litter fell to 10.16, from 10.33 a year before. Going forward, producers in the US intend to farrow 2.89 million sows in the period September to November, up 4% from actual farrowings during the same period in 2013, with a similar rise anticipated in the following quarter.

What this means for the pig crop will depend on the extent to which PEDv cases increase again during the coming winter.

UK Pig Price

For the week ended 27 September, the GB SPP fell further to 155.21p per kg, down by almost 1p from the previous week.This confirms that the small increase last week was only temporary and the pig market remains weak. In line with the GB SPP, the EU spec DAPP fell to 155.10p per kg, down by around 1p from the week before.

The annual difference continued to widen for this price series, showing a gap of around 16p. This is the last DAPP to be published and going forward only the SPP and the APP prices will be available from next week. AHDB/BPEX estimated clean pig slaughterings totalled 167,800 head for the week ended 27 September.

This was marginally up from the previous week but slightly down from the same week in 2013. The weekly carcase weight corresponding to the GB SPP, rose to 81.96kg, a week-on-week change of 200g. For the week ended 20 September, the GB APP was marginally down on a week earlier at 158.73p per kg.

In the same week the GB SPP stood at 156.12p per kg, nearly 3p below the GB APP.

 

At £51.75 per head, the 30kg weaner price weakened for the week ended 27 September, as supplies on the market increased. This meant prices averaged £2.43 below the previous year's level. Similarly, the weekly average for a 7kg weaner edged down by 21p to £37.94 per head.

This came despite a reduction in throughputs, according to industry reports. While AHDB/BPEX is not able to able publish GB cull sow prices at present, the German price provides a good indication of the trend in the UK market. The German price for this week is down 10% on two weeks earlier.

EU Pig Prices Continue to Decline

At €158.24 per 100kg, EU pig prices had generally weakened in the four week period ended 21 September, down by €6. At the latest quotation, the average pig price across the EU was similar to the level at the start of the year but was around €17 below the high point of this year so far in early July. It was as much as €32 lower than in the same week last year, as prices have failed to reach the highs seen in the previous two summers.

While pig prices globally have risen, this was not evident in the EU. The slowdown in European prices is a function of market imbalances, with rising supplies outstripping subdued domestic and export demand, partly due to the Russian ban on EU pork imports.

Despite falling domestic quotes, the gap between EU and UK pig prices stood at €33 per 100kg for the week ended 21 September.

Amongst the key markets, the decline in pig quotations in the last four weeks was sharpest in Spain and Portugal, where prices were down by €11 and €13 respectively. Germany had a large part to play in the declines of late, given its influence on the EU market, and prices there fell by €8 in the four weeks ended 21 September.

In fact, German pig prices have fallen by €22 in the last three months. There were similar declines in the Netherlands, France and Poland where pig quotations also fell by around €8. In contrast, few markets recorded increases in their weekly average pig reference price, with Denmark being one of them; the Danish pig price rose by €2 during the same period. 

Reduction in Number of UK Pig Farms

Defra have recently released figures from the 2013 June Agricultural Survey showing the number of UK commercial agricultural holdings with pigs.These reveal that there was a 1% fall in the number of pig holdings between June 2012 and June 2013, to 11,000.

However, within this total, there was an increase in the number of holdings with 1,000 or more pigs, which numbered 1,420, 5% up on a year before. Between them, these farms accounted for 85% of the UK herd. There was also a drop in the number of farms with breeding pigs, which fell by 2% to just under 6,000. Again, the vast majority of the herd was located on a small proportion of this total, with 810 farms with 100 or more sows accounting for 88% of the national breeding herd.

The number of holdings with feeding pigs was almost unchanged at 9,200, with around 4,200 of these also having breeding pigs.

Another new dataset shows the number of pigs in each English county in June 2013. This confirms that over half of English pigs are located in Yorkshire and East Anglia. North Yorkshire had more pigs than any other county, 679,000, followed by Norfolk, East Yorkshire and Suffolk, all of which had over 400,000.

No other county had more than 170,000 head, emphasising how concentrated the industry is. Norfolk had the highest number of breeding pigs, 73,000, just ahead of North Yorkshire.

Feed Market Update

UK feed wheat futures (Nov-14) closed at £107.70/t on Tuesday, down £2.05 on the week. They are now at their lowest level since July 2010. Chicago wheat futures (Dec-14) closed marginally higher this week at $175.53/t, up $0.65 compared with last Tuesday, while Chicago maize futures (Dec-14) declined (by $1.87/t) over the week to settle at $126.28/t.

In its September report, the International Grains Council (IGC) further increased 2014 global grain production forecasts, although they remain behind the latest USDA levels. These latest revisions continue to add to a growing sentiment of a high global market supply. This includes the EU, with both wheat and maize production revised higher by the IGC last week which will result in the European feed grain market enjoying high supplies.

Over the past week, Chicago soyabean futures (Nov-14) declined by $8.45 to $335.53/t by Tuesday. Nearby futures prices hit their lowest level since February 2010 given favourable harvesting conditions. Hi-Pro soyameal prices (ex-store, East Coast, September delivery) were £318/t last Friday, down £10 on the previous week. 

Analysing EU and UK Pig Numbers

Figures from the May/June agricultural surveys carried out in the major EU Member States show an increase in the pig herd and, for the first time in nearly a decade, there was also an increase in the breeding herd. So, do the latest figures mark the end of the long-term decline of the EU breeding herd?

To find the answer to this question and read more about the figures and what could mean for the EU pig market, click here. English and Northern Irish pig numbers for June 2014 have also now been published. The two regions account for over 90% of the total UK pig herd. The new figures paint a mixed picture. There was some positivity in the Northern Ireland pig industry, in contrast to the English pig sector which showed reductions in the herd. However, Northern Ireland’s pig industry accounts for not much more than a tenth of the UK total, so the UK pig herd is likely to have declined since June last year. To read more about the figures, click here.

Dutch Pig Exports Decline in First Half of 2014

During the first two quarters of 2014, Dutch pork exports were slightly behind the previous year. At 339,300 tonnes, they were 1% below the level in January-June 2013 and 6% below the same period in 2012. The majority of the pork was exported within the EU, with less than 21% destined for non-EU markets. The total value of the exports during the first half of the year reached €714 million, down less than 1% from a year earlier. This is because of the unit value of pork shipments remaining static on the year at €2,100 per tonne.

The main destinations were Italy, Germany and Greece, which between them accounted for 42% of all Dutch pork exports. During the first half of 2014, volumes were down to each of these countries, particularly to Greece, which declined 21% on the year. In addition, exports to Italy and Germany fell 3% and 8% respectively.

 

Larger export volumes to non-EU markets offset these declines; Japan imported nearly twice as much Dutch pork on the year. Several other non-EU countries took greatly increased volumes, offsetting the loss of trade with Russia, Holland’s largest non-EU market last year. Image Title Live pig exports were down 15% in the first half of the year, compared to the previous year, to 4.3 million head.

The key driver behind this was the 17% fall in pigs exported to Germany, a drop of over 600,000 head on the year, with both weaners and slaughter pigs affected. In contrast, exports to Spain were well up, with 25% more pigs being shipped during the first 6 months of this year and an increase of just under 250,000 head since the same period in 2012. The value of live pig export fell in line with the volume decreases, by 16%, to €431 million.

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