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AHDB Pig Market Weekly


25 June 2015

AHDB Pig Market Weekly - 25 June 2015AHDB Pig Market Weekly - 25 June 2015


AHDB

UK production growth continues in May
Latest figures from Defra show that the strong growth in UK pig meat production continued in May, with output over 5% higher than a year earlier at 66,700 tonnes. At 789,400 head, the UK clean pig kill was also up by 5%, in line with the trend in most recent months. The year-on-year growth in slaughterings was similar across all parts of the UK, with Scotland and Northern Ireland also recording a 5% uplift. Although these figures add weight to the view that census results showing a declining breeding herd may have been pessimistic, they also confirm that the productivity of the UK’s sows continues to improve.

 

As well as the ongoing increase in pig numbers, carcase weights have also been consistently heavier over recent months. This trend continued in May, with the average of 81.2kg around three-quarters of a kilo heavier than in May 2014. However, the growth in production from clean pigs was again partly offset by lower sow slaughterings. Throughputs were 7% down on a year earlier at 18,000 head. Cullings have now declined for 12 consecutive months, adding to concerns that increased retention of sows could have an impact on productivity in the longer-term.

EU pork exports slip back in April
Having been relatively strong in the first quarter of 2015, EU pork exports slipped back somewhat in April. Volumes were 2% lower than a year earlier and 11% down on April 2013, before the Russian ban. The figures would have been substantially worse were it not for strong sales to China, with shipments up by nearly two-thirds compared with a year earlier. Most other major markets took less EU pork than in April 2014, including some, such as South Korea and the Philippines, which had previously been growing strongly. Despite the lower figure in April, exports for the first four months of the year were still 9% higher year on year. The unit price of EU exports in April was 3% lower than a year earlier in euro terms, meaning that the value of the trade was down 4% on the year, at €285 million. The weakening of the euro over the last year means that the unit price in US dollar terms was down by nearly a quarter, which has helped the competitiveness of EU product on global markets.

China was also the main growth market for EU offal exports in April 2015, with shipments up by half. Because of China’s leading position among export markets, this was enough to mean that volumes were up overall despite the other major markets, Hong Kong and the Philippines, taking less. Somewhat higher unit prices meant the value of offal exports was up 18% to a fraction under €100 million during the month.

UK pig prices
UK finished pig prices increased for the fourth week in a row, with the largest single gain in over a year. In the week ended 20 June the EU-spec SPP was up by almost half a penny at 132.38p/kg, to the highest level since the end of March. Supplies continued to tighten even though demand will have been affected by the continuing lack of summer weather. The SPP was 31p lower than in 2014 although this difference has narrowed in recent weeks as prices at this time last year were falling. Estimated slaughterings were down 2% both on the week and on the same period in 2014, while carcase weights fell to their lowest level since December. However they were over a kilo heavier than the same week in 2014. With carcase weight falling it would be expected that the average probe measurement would also fall but it actually increased to 11.2mm.

 

In the week ended 13 June, the GB APP again increased, up by over half a penny at 136.88p/kg, its largest weekly increase since early May. The difference between this year and last fell to under 29p, the smallest decline since early April. The difference between the APP and the SPP was marginally under 5p per kilo.
Weaner price developments in the week ended 20 June were mixed, with 7kg weaners rising, while 30kg weaner prices declined. The prices of 7kg weaners were 52p up on the week at £33.12 per head, even though throughputs were higher. Prices of 30kg weaners fell by 44p to £44.08 in spite of lower numbers. However, both 7kg and 30kg weaner remained well below levels seen in 2014, with prices down by almost £8 and £12 respectively.

Danish exports increase in early 2015
In the first three months of 2015, Danish exports of pork increased by 6% year on year to 292,000 tonnes but the total value fell by 5% to DKK4.3 billion (€580 million). Intra-EU trade increased its share of the total and other EU countries remained the largest market for Danish exports, with 74% of all shipments from Denmark going to them. Germany was the largest single market for Danish pork but its share of the total fell to 32% as volumes grew more slowly than other countries. Shipments to the next three markets, Poland, Italy and the UK, grew by 12%, 20% and 19% respectively. Exports to non-EU markets increased by 1% despite a decline in volumes going to the largest such market, Japan, where shipments fell by 21% compared to 2014. The main increase in purchases came from Australia, with volumes up 60% year on year, and smaller Asian markets such as South Korea and Taiwan. Shipments to China fell by 4%.

 

The first three months of 2015 have continued recent trends when it comes to Danish live pig exports. Numbers were up by 15% as Danish producers look to export increased numbers of weaners to other countries where they can be finished more cheaply. During the quarter, over 3.2 million pigs were exported, with 96% being weaners. Germany remained the largest importer of Danish live pigs, with numbers up by 9%. However, Poland remains the major growth market, with shipments increasing by over a third. Following the falls seen in the deadweight trade and the subsequent fall in the weaner price, the overall value of Danish live pig exports fell by 8%.

Further decline in organic pig production
New figures from Defra show a third consecutive annual decline in the number of organically farmed pigs in the UK in 2014. At 28,300 head, the latest figure is the lowest in records back to 2003 and is 6% down on the previous year. Organic pigs now make up only 0.6% of the national herd, the lowest proportion among any of the major livestock species. Organic production accounts for 3% of the cattle herd and a similar proportion of the sheep flock, for example.

 

The situation for pigs reflects the general downward trend in organic farming. The amount of fully organic land was at its lowest level since 2007. If land in conversion to organic is included, the figure is the lowest in records back to 2002. Similarly, the number of organic producers and processors has fallen to around 6,000, down from a peak of nearly 8,000 in 2008.

Feed market update
Grain prices have risen throughout the last week, sparked by continued concerns of unfavourable weather impacts across Europe, Canada and the US. Nov-15 UK feed wheat futures closed at £124.40/t on Tuesday, up £2.15 on the week. Paris maize futures also closed higher compared with the previous week, with the Nov-15 contract up by €3.75, closing at €166.25/t on Tuesday. Particular concerns surround Europe and, while continuing to suggest high production, the latest data from the EU Commission showed lower 2015 yield forecasts in the EU-28.

Drier than normal conditions in Canada have also increased the risk of yield loss in the key wheat producing province of Saskatchewan. The pace of the US winter wheat harvest is lagging behind progress made at the same point last year according to USDA, given recent rain. At the same time, this is benefiting the maize crop.

Soyabean futures have received some support throughout the last week, with remnants of tropical depression ‘Bill’ flooding some soyabean fields in the US. The area still to be planted as at 21 June was double the proportion at the same time last year. Nov-15 Chicago soyabean prices were up on the week, by $12.22, closing at $352.98/t yesterday. With harvesting of the 2014/15 crop now virtually complete, Argentina’s soyabean production expectations have been lifted.

Smaller markets remain important to EU exports
It is now a year and a half since Russia implemented the ban on imports of pork. Despite this, exports fared relatively well after the loss of the Russian market in 2014 and pork exports from the EU were down just 2% compared to the previous year. Much of this excess went to well established markets in the Far East. However, increased volumes going to smaller, non-traditional markets were also a significant factor in maintaining the volumes shipped.

EU exports to the Philippines grow
The Philippines continues to emerge as an important market for EU exports of pork and offal. Imports of pork to the country were up by nearly a third in the first quarter of 2015, compared with a year before. However, shipments from the EU nearly doubled to 12,400 tonnes, partly replacing imports from North America. This meant that the EU’s market share rose from 40% in 2013 to almost 80% this year. Within this, imports from the UK more than trebled, although they still accounted for less than 2% of the total. As well as the increased volume, unit prices were also substantially higher, rising 10% in Philippine pesos but as much as 35% in euros. This meant the value of EU pork exports to the Philippines increased by over €10 million year on year to €17.8 million.

 

The EU also gained market share in the even more important pig offal market in the Philippines. Offal imports were up 23% overall but EU shipments were up by nearly two-thirds, increasing its share to nearly three-quarters. This compares to a share of below half two years before. The UK’s share of this trade was higher at around 4%, with volumes having trebled since the first quarter of 2014. As with pork, unit prices were significantly higher, meaning the value of this trade to the EU roughly doubled to reach €26.5 million during the three months.

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