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QMS (Quality Meat Scotland)


19 June 2015

QMS (Quality Meat Scotland) - June 2015QMS (Quality Meat Scotland) - June 2015


QMS - Quality Meat Scotland

Pigs

Prices and Supplies

Since the beginning of March, prime pig producer prices have been on a slow downward trend, contrasting with the historic pattern of a seasonal upturn. From 132.7p/kg dwt in the first week of March, the SPP had edged lower to 131.1p/kg in late May. This left the SPP down by a fifth when compared to the same week of 2014.

Weaner prices have been lacking direction in recent weeks. Prices for 7kg weaners have held in a narrow band around the £33 a head mark since February, while 30kg store pigs have been trading between £44 and £45 per head in most weeks. In the week ending May 23, prices were down by 19.5% yearon-year.

At UK abattoirs, prime pig supplies continued to run well ahead of year earlier levels into April. Slaughterings increased by 3.5% over the same month of 2014 and reached 970,700 head. This was the highest April total for 15 years. Supplies ran above year earlier levels in all three UK regions, rising in line with the UK average in both E&W and NI, but increasing by more than 6% in Scotland.

For a third successive month, there was a slight seasonal decrease in the average prime pig carcase weight at UK abattoirs. It slipped by 0.2kg on the month to 81.6kg in April. Nevertheless, this was still 1.1kg heavier on the year; a gain of nearly 1.5%. The 6% year-on-year increase in prime pig slaughterings at Scottish abattoirs meant that weekly throughputs were around 350 head higher than in April 2014 at almost 5,750 head. However, they still fell 200 head per week short of April 2013 levels. At 82,600t in April, UK abattoir pigmeat production was 3,600t (4.5%) above its year earlier level. A 5% increase in prime pig production to 79,200t more than offset a 4% decline in the output of sow meat.

 

GB household pork consumption volumes fell significantly compared to a year earlier in the 12 week period ending on April 26. Indeed, the volume of pork sold fell by more than 7.5% and 5% fewer households bought it. This was despite lower prices. Since prices averaged 5% lower, the amount of money spent buying pork was down by 12.5%. Looking at the sales performance of different cuts, the difficulties were most apparent in chops & steaks and loin roasting joints; both fell by more than 10%. Meanwhile, shoulder roasts were also significantly lower, down 7.5% year-on-year. However, leg roasts continued to buck the overall trend with volumes rising by nearly 3%. It therefore seems unsurprising that leg roasts had the largest price decline over the last year, of more than 13%.

By contrast, loin roasts, which saw the largest sales volume decline, became slightly dearer. After slipping back in late April, prime pig prices stabilised in the EU28 during May. The average Grade E pig price stood at €1.42/kg dwt (102p/kg) in the week ending May 24, up by a cent on the previous two weeks but down 3.5% on the €1.47 (105p/kg) reached in late April. Though this was 10% above its low point in late January, prices were still down by more than 13% year-on-year. Compared with late April, prices slipped by 6% in Belgium, Holland and Poland.

Meanwhile, German prices fell in line with the EU average (3.5%), there were smaller 1-2% declines in France and Spain, and Danish producers saw no change. Compared with May 2014, most of the major pig producing Member States have seen farmgate price declines of 10-15%. However, the decrease was more severe in Spain at one-fifth. In the year to late May, UK prices fell by 7.5% in euro terms, indicating a loss of price competitiveness. Indeed, the UK average has been trading at a 25-30% premium to the EU average since February, compared with less than 20% at the same time last year.

 

UK pigmeat exports were down 10% yearon-year in March 2015 at 17,150t. Although more cured product was exported, rising 5% to 1,350t, pork exports were 13% lower at 15,800t. With domestic production continuing to grow, it seems likely that UK pork exports were held back by the challenge of competing in a well supplied European market at a time when the exchange rate had strengthened.

The volume of pork exported to Denmark and Holland was down by 2-3% year-on-year while shipments to Germany and the Irish Republic were 8-10% lower. However, there was an even more significant one-third decline in shipments to Hong Kong and China. This meant that these two markets accounted for a fifth of pork exports compared with 28% in March 2014.

The UK imported 7% less pigmeat than a year earlier in March. Of the 48,300t total, 59% was pork and 41% cured pigmeat. This compared with a 57%:43% split in March 2014 as pork imports fell at a slower pace, down 4%, while bacon & ham shipments declined by 11%. With pork imports falling in March, trade with a number of the main suppliers was much lower than in the same month of 2014. Imports from France, Ireland and Germany contracted by more than a fifth while imports from Spain were down by 16% and Holland delivered 6% less pork. In contrast to the overall trend, two of the main suppliers did make inroads into the UK market; shipments from Denmark and Belgium rose by 14% and 21%, respectively. With bacon & ham imports falling significantly in March relative to a year earlier, the two largest suppliers, Denmark and Holland, saw declines of more than 20%. However, this was partially offset by a 64% increase in imports of cured product from Germany. This meant that Germany accounted for 21% of shipments, up from 11.5% 12 months before.

News Round up

Feed wheat prices fell significantly in the second half of April and into May. Although there has since been a price rally, after heavy rainfall in the key US winter wheat regions suggested that there could be some delays to harvesting, they remain cheaper than at the beginning of April. In North East Scotland, farmgate wheat prices traded at £109/t in the final week of May, compared with £103/t two weeks earlier but down from £118/t in late March. Meanwhile, barley traded at £103/t in late May, up £3 on the week, but below its range of £104-7 in most weeks between February and mid-May. Compared to the same week last year, wheat was down 30% and barley by 14%. Strong global crop production forecasts continue to place downwards pressure on the market.

Though soyameal prices edged higher in late May, they had fallen back significantly through April and early May on good prospects for soyabean harvests in the US, Argentina and Brazil. As a consequence, at £307/t, Hi-pro soyameal prices were down by approximately 3% on the month and were 8-10% lower than at the beginning of 2015. Relative to late May 2014, they traded at an 18% discount. On April 1 2015, there were 1.035m sows on Danish farms. This was up by just under 1% from a year earlier when the sow herd had stood at 1.026m head. Furthermore, it was an 8-year high and came despite a sharp fall in producer prices over the past 18 months. This may suggest that the most efficient businesses have remained profitable and willing to expand.

Looking at slaughter pig numbers shows a different picture. Indeed, the number of prime pigs weighing over 50kg lwt intended for slaughter was down by more than 2% year-on-year at 3.055m head, indicating that Danish abattoirs will face tight supplies in the coming months. Given the expansion in the breeding herd, the decline in slaughter pigs is a likely reflection of higher live exports; they rose by 14% year-on-year in Q1 2015 to just over 3m head. Looking at younger categories of pigs, the number of weaners on Danish holdings at the beginning of April grew by more than 4% to 5.566m head while the piglet population expanded by 2% to reach 2.608m head. A faster rise in piglet and weaner numbers than for sows implies increased herd productivity.

Kantar Worldpanel data shows that French households bought 1% less fresh pork in the 4 weeks to April 19 than they had during the same period of 2014. This was despite pork becoming 1% cheaper to buy and gaining in price competitiveness from beef and lamb which both became more expensive. Within the fresh pork category there was a 3% decrease in pork loin sales but a 20% increase across the other cuts, which had lower average prices - €6.30/kg (£4.50/kg) compared to €7.50/kg (£5.40/kg). Although sales volumes fell, fresh pork did better than cured pigmeat products. Indeed, there were 4-5% declines for ham, bacon and charcuterie products. These declines may reflect some price sensitivity as most categories of cured pigmeat saw slightly higher prices than 12 months before. Bacon was an exception; prices averaged 0.5% lower.

As of February 2015, the Chinese sow herd had contracted by 18.5% in just a year to 41m head. In terms of sow numbers, the annual decrease amounted to approximately 8m head. To put this into context, this is equivalent to the entire sow herds of Germany, Spain, Denmark, Holland and France. There was also a significant decline in the number of slaughter pigs on Chinese holdings with numbers down 10% to 390m head. The smaller proportionate decline in the prime pig population reflects increasing productivity in China as small producers exit the industry and the more industrial enterprises expand. According to Rabobank’s Pork Quarterly, there is still a long way to go before Chinese productivity catches up with other nations, with room for improvement in genetics and farming technique. Despite falling pig numbers, producer prices have been trending slightly lower over the past three years. During Q1 2015, piglet prices were trading at the equivalent of around 200p/kg while prime pigs were selling for approximately 135p/kg dwt.

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