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AHDB Pig Market Weekly


04 December 2014

AHDB BPEX Pig Market Weekly  4 December 2014AHDB BPEX Pig Market Weekly 4 December 2014


AHDB

Gammon – not just for Christmas?

Gammon joints have been a Christmas food staple for centuries. Inclusion in festive menus pre-dates turkey by centuries and this trend looks to be continuing, as Kantar Worldpanel data show consistently big uplifts in sales volumes in the run up to Christmas. The versatility of gammon joints is a contributing factor to its popularity at a time of year when people gather together to celebrate. It can be eaten hot or cold and when glazed then roasted is an attractive centrepiece to a yuletide buffet. Flavours can be infused at either the boiling or roasting phases. If there is any left, gammon can be included in pies and soups, sandwiches or to accompany a range of dishes from chips to salads.

 

Figures shows that in recent years, sales have been maintained at a lower but steady level from January to November and then show a considerable uplift in the run up to Christmas. Possible opportunities for growth exist by strengthening the association of gammon with family gatherings and celebrations, not just at Christmas but also outside the festive period. Creative gammon joint preparation methods designed by high-profile celebrity chefs may also help boost performance. A range of such gammon recipes can be found on the Lovepork website by clicking here.

Global prices falling from record high

This year, global pork prices have reached unprecedented levels, based on analysis of export prices from the four main global exporters (the EU, US, Canada and Brazil). Prices began to rise in March as the impact of PEDv began to hit slaughter pig numbers in the US, Mexico and Asia, meaning both a tightening of supplies and an increase in demand on the global market. Prices peaked over the summer at around $3.50 per kg, 20% higher than a year earlier. Since then, they have fallen back but, by September, they remained well above the previous peak, at $3.26 per kg. This came despite the amount of pork traded by the four main suppliers in the third quarter of 2014 being down 8% year on year.

The recent price decline has been driven by two main factors: the Russian ban on imports from the US and Canada (as well as the EU) and the lower than expected impact of PEDv in the US, given heavier carcase weights. The Russian ban had a particularly strong effect on Canadian export prices, which fell from US$3.69 per kg in July to just $3.13 in September. US export prices were also lower but this was mainly driven by a fall in domestic prices. In contrast, Brazilian prices increased further as Russian demand turned in that direction, rising from an already inflated $3.66 in July to $3.98 in September (and as high as $4.19 in October). Unlike the other major players, EU exporters have not seen the benefit of higher prices. The Russian ban imposed in January means that this year’s average dollar price for EU pork exports of $3.19 was only slightly higher than last year’s $3.13, with the euro price 1% down on the year. This does mean that the EU has been the lowest-priced exporter this year – it is normally the highest-priced – which has helped it to find alternative markets for the pork which it previously sent to Russia.

UK pig price

For the week ended 29 November, the EU spec GB SPP fell further by 0.61p to 145.53p per kg. This is the eight consecutive week of price decline representing a fall of 10p. Please note, there is one plant missing from the sample this week. The downward trend in finished pig price is a direct result of a continuation in weak demand from the processors in spite of the impending festive season. As such, this is the lowest SPP quotation since the series began. The discontinued EU spec DAPP was last at such a low level in April 2012. AHDB/BPEX estimated slaughterings for the week ended 29 November stood at 189,100 head, 11% higher compared with the same week in 2013 and also stood at its highest so far this year. Carcase weight during the same week fell to 81.98kg, 270g lower than the week previous returning to the average of the last week of September. For the week ended 22 November, the EU-spec GB APP fell by 0.83p to 149.78p per kg. In the same week the SPP stood at 146.14p/kg, a difference of 3.64p between the two price series.

The 30kg weaner price for the week ended 29 November, edged down to £48.10 per head. This was a week-on-week change of 13p while throughput was also lower. The weaner market mirrored the decline in finished pig prices, and was £8 below the previous year’s level. The 7kg weaner prices also fell during the same week but by a more marked amount. Compared with the week earlier, it fell by almost £2, to £33.29 per head. This was £9 lower than the same week in 2013. Industry reports suggest a dramatic fall in sow prices in the UK last week and this week the German sow price has fallen by 3%.

German pork trade stable

Latest German pork trade figures for January to September only showed a 1% decline in exports, as volumes fell to 1.27 million tonnes. This was despite the Russian ban on EU pork imports; Russia was Germany’s largest non-EU market last year. Shipments destined for the EU market increased by 2%, pushing their market share to 84%. The key driver was the increase in exports to Italy, the largest export destination for German pork; shipments jumped by 30,000 tonnes, or 12%, on the year. However, many other export destinations within the EU reduced volumes compared with last year. In particular, sales to Poland and the Netherlands fell by 6% and 11% respectively, while shipments to the UK fell back 5%. Non-EU exports declined by 16%, largely due to the Russian ban. Shipments to China also dropped but this was somewhat offset by a jump in volumes sent to South Korea, which more than doubled to 45,200 tonnes.

German pork imports were also little changed from January to September 2013. Danish shipments increased by 5%, while 8% less Belgian pork was sent to Germany. In both cases, this reversed changes from 12 months earlier, meaning volumes were similar to the first nine months of 2012. Among smaller suppliers, Poland and Ireland both recorded significant growth in shipments. The live pig trade also remained relatively static overall, with imports moving downwards by just 1%. However, within the total there have been some movements. Weaner imports increased by 3% to 7.39 million head, with most of the extra piglets coming from Denmark. In contrast, slaughter pig imports fell by 9%, or 350,000 head, to 3.36 million head. Over 90% of imports come from the Netherlands and its producers chose to slaughter more pigs at home rather than selling to German processors. Live pig exports also fell by 1% to 2.43 million head, with a 7% increase in weaner sales offset by an 11% fall in slaughter pig shipments.

Russian demand drives Chilean pork exports

Chile’s pork exports between January and September totalled 88,500 tonnes, down 2% compared with the same period in 2013. This maintained its position as the fourth largest non-EU exporter. The decline was the result of a 12% year-on-year reduction in exports in the first half of the year. However, the situation has since changed markedly and volumes in the third quarter rose by 19% compared with the same period in 2013. This was driven by increased shipments to Russia (almost double the volumes of last year). Chile gained from the trade restrictions Russia has placed on the EU, US and Canada. As such, Russia now accounts for 28% of Chile’s total exports, a jump from 17% in the third quarter of 2013. Chilean pork exports to Japan fell by 12% in the third quarter compared with the same period in 2013. However, despite the increased competition from Russia, supplies to China and South Korea were up year-on-year, by 29% and 37% respectively.

As a direct consequence of the higher demand for Chilean pork, the average price of shipments in the third quarter was a fifth higher compared with the previous year, in US dollar terms. In particular, a 60% higher export price for pork destined for Russia contributed to the overall price increase. Given the rise in volumes and the price of exports, the total value of pork exports in the third quarter reached $135.9 million, up 44% compared with a year earlier. The value of Chilean pork exports in the year to September, totalled $322 million, up 5% on last year.

Feed market update

May-15 UK feed wheat futures prices closed at £140.95/t on Tuesday (2 Dec), up £5.55/t on the previous Tuesday’s close. Chicago May-15 futures prices also followed the upward trend and closed $16.17/t higher on the week. Prices were supported by early concerns about the 2015/16 crop and apprehension that the introduction of tougher rules in Russia may impact on its exports. In contrast Chicago maize futures prices closed at $153.44/t on Tuesday, down $2.36/t on the previous week. The first official UK cereals supply and demand estimates for 2014/15, published last Wednesday, revealed a 1% decline in demand for cereals in animal feed compared with last season. In spite of this, due to its increased price competitiveness, wheat usage is estimated 9% higher year-on-year, at 6.7Mt.

This is expected to be at the expense of other grains, with the proportions of barley, maize and oats in animal feed declining compared with 2013/14. May-15 Chicago soyabean futures prices settled at $371.07/t on Tuesday (2 Dec), down $18.83/t from the previous Tuesday’s close, and the lowest price seen since mid-October. At Tuesday’s close, May-15 Paris rapeseed futures prices were €9.25/t lower than the previous week at €337.25/t. UK rapemeal (34%, ex-mill Erith, December delivery) was £178/t on 28 Nov, up £5/t on the previous week. Soyameal (Hi pro, ex-store, East Coast) was £340/t on 28 Nov, down £10/t in comparison to the previous price of £350/t on 14 Nov. To read more about the latest developments in the feed market click here.

Quarterly Category Report published

The latest edition of the BPEX Quarterly Category Report has now been published. The report provides an overview of the retail market for the four main pig meat categories, pork, bacon, sausages and ham. The report covers the period up to 12 October and provides information for each category about volume sales, spending, prices, purchase frequency and household penetration. The report also gives information about market share for each of the main multiple retailers and for other types of retail outlets. To download a copy of the report, click here.

Northern Ireland herd figures revised down

The Department of Agriculture and Rural Development have released revised figures for the size of the Northern Ireland herd in June 2014. The final figures show a slightly smaller increase than was recorded in the provisional figures published in August. Nevertheless, the overall pig herd was up 8% on June 2013, as a result of improved productivity and an increase in the import of pigs from the Republic of Ireland for finishing. The breeding herd was only up by 1%, also a slightly smaller increase than was suggested by the provisional figures.

 

DOWNLOAD REPORT:- Download this report here

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