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AHDB Pig Market Weekly


09 July 2015

AHDB Pig Market Weekly - 9 July 2015AHDB Pig Market Weekly - 9 July 2015


AHDB

German breeding herd declines

Provisional figures from the May 2015 German pig census show a stable herd overall but a decline in the size of the breeding herd. The number of breeding sows was over 2% lower than a year earlier, reversing the increase seen in the previous year. This confirms that the low pig prices of recent months and the resulting poor profitability have had an impact. It appears that this was particularly felt by smaller producers, as the number of farms with breeding sows was down by 6% to under 10,000. Furthermore, numbers of both in-pig and maiden gilts were down 8%, suggesting there will be no recovery of sow numbers in the short-term.

The decline in the breeding herd supports suggestions that German finished pig supplies could tighten later in the year. If this is replicated elsewhere in the EU, it could provide some much-needed support to prices. However, the census results show that supplies may remain relatively plentiful in the short-term. The number of pigs being raised for slaughter in May was slightly higher than a year earlier, with a 1% rise in those in the heaviest weight category. Although the number of weaned pigs under 50kg was lower than in May 2014, it was still significantly higher than in May 2013, as was the number of piglets.

EU production remains high in April

Although not reaching the same heights as in March, EU pig meat production remained high in April. Output was around 4% up on the same month last year, at 1.89 million tonnes. The slowdown in the rate of increase was expected, given the earlier Easter this year, but slaughterings were still up 2% at a little under 21 million head. This took throughputs for the first four months of the year to 85.8 million head, 4% more than a year earlier, with pig meat production up 6%. With an increase on this scale at a time when demand is still being hit by the Russian ban and economic difficulties, it can be no surprise that EU pig prices have remained subdued.

 

The overall rise in April came as a result of varied trends between Member States. Much of the rise was due to an unusually large rise in recorded Danish slaughterings, although this may be subject to revision. Elsewhere, Spain and the Netherlands continued to record strong growth, with both killing 6% more pigs than last April. However, this was partly offset by lower throughputs in Germany (down 1%), France (-3%) and Poland (-13%, likely due to the timing of Easter). Despite these declines, France was the only leading producer to record lower slaughterings in the first four months of the year, emphasising the relatively plentiful supply situation across the EU.

UK pig prices

The UK finished pig price recorded a slight fall in the week ended 4 July, following six weeks of increasing prices. The EU-spec SPP was down by 0.15p on the week at 132.63p/kg as supplies increased slightly. However, sharper falls seen in 2014 mean the difference between the two years is at its lowest level since March at just over 30p/kg, when the SPP was being compared with the previous year’s DAPP. Estimated slaughterings were up 9% on the previous seven days as tight supplies and plant breakdowns in the previous week led some processors to increase numbers in this week. Slaughterings were also up 10% on the same week in 2014 as a result. Carcase weights were down sharply on the previous week, falling by over 800g to 80.31kg, possibly due to the hot weather during the week. This reduced the difference compared to last year to less than half a kilo, while the average probe measurement fell to 11.1mm.

A further increase to the GB APP was seen in the week ended 27 June, with the EU-spec APP up by almost a quarter of a penny at 137.29p/kg. The price was over 27p lower than year earlier levels but this is a smaller difference than the previous week. The difference between the APP and the SPP continued to fall at just over 4.5p.

The price for both weights of weaner increased marginally in the week ended 4 July, following falls in the previous week. The price of 30kg weaners was up by 4p on the week at £43.51 per head, while 7kg weaners increased by 19p to £32.76, with higher numbers traded than of late. Both prices continue to track well below 2014 levels, with 30kg weaners down by £13, while 7kg weaners were down by over £7.50 per head.

Polish trade continues to grow

Polish pork exports increased 8% in the first quarter of the year after falls last year driven by the import bans imposed by Russia and several Asian markets, following outbreaks of African Swine Fever in the country. A year on from the bans, Polish exports have increased back to levels similar to those in January-March 2013. Exports to non-EU markets were less than half their level in 2013 as Polish pork is excluded from China, Japan and Korea, among others, as well as Russia and its neighbours. Therefore, the increase came from shipments to other EU countries as exporters looked to replace the lost markets. Volumes going to Italy, Germany and Slovakia, the three largest export markets, were up by 22%, 32% and 8% respectively. However, the value of shipments fell by 4% compared to 2014.

Pork imports to Poland were also up in the first quarter of the year, with volumes coming into the country increasing by 9% compared to the same period in 2014. This rise comes despite an increase in domestic production during the same period, suggesting some recovery in demand for pig meat within Poland. The majority of the growth came from Belgium, from where imports increased by 20%, moving it above Germany to be Poland’s largest supplier of pork. Gains were also seen from other major suppliers. The overall value of imports increased by 1% to €303 million, despite lower unit prices.

Live pig imports continued to increase in the first three months of the year. Numbers reached 1.4 million, up 12% on the year. Most of this increase came from Denmark, with weaner shipments up by more than a third on the year. Numbers coming from Germany actually fell, with the largest decrease coming in pigs for slaughter.

Irish market growing despite challenging finances

The UK’s nearest neighbour, Ireland, has a relatively small pig herd, with fewer than 150,000 breeding sows. However, the country’s small population means that it is still a significant pork exporter. Given the UK’s proximity, much of Ireland’s exported pig meat ends up on its market; Ireland is the fourth largest supplier overall and the largest source of processed imports.

The Irish pig herd has been in expansionary mode lately, with 5% more pigs slaughtered in 2014 than the previous year. In the first five months of this year, throughputs were up 7% year on year. However, with current price levels below production costs, the expansion of production may come to an end later in the year.

Feed market update

It’s been a volatile week for UK feed wheat futures, although Tuesday’s close, with the Nov-15 contract up only £0.75 on the week at £132.75/t, disguises much of this. The level of £135/t last Thursday was the highest daily close since January 2015. The results of the AHDB planting survey confirmed the anticipated trends for grains, with a wheat area 3% lower than last season coupled with a 3% increase in barley area. Yields remain sensitive to the weather but this does not preclude relatively good wheat production being achieved. Beyond GB, international factors continued to be the driving force of the rally through last week, as hot, dry weather persisted across parts of Europe and Canada. Moving into this week, the uncertainty over Greece’s place in the Eurozone and the subsequent effect on the euro has been hanging over the market.

Soyameal prices (Brazilian, ex-store Liverpool, spot delivery) strengthened £10/t on the week to Friday 3 July, with lower gains for rapemeal. These followed rallies in soyabean and rapeseed futures last week but it is probable that UK protein meal prices will have followed the falls in oilseed futures over the past couple of days. The dry conditions in Europe and Canada are also continuing to affect rapeseed crops. The latest USDA crop progress report showed US soyabean plantings still incomplete as of 5 July and as the optimal planting window has now passed for most areas, this could lead to a lower area being planted than had been intended. US soyabean crop condition scores, however, did not decline, suggesting the weather that has been hampering planting has not hit crop conditions.

New publications shed light on the pig industry

The newly published AHDB Pork Yearbook provides an update on the performance of the pig industry over the last year. It includes key industry statistics and pig performance data, both nationally and internationally, as well as details of marketing, knowledge transfer and research and development activity carried out by AHDB over the last year. It also focuses on the field trials which are under way and looks at the work on skills development together with innovation work.

The 2015 Pig & Poultry Pocketbook is also now available through the AHDB Pork website. The Pocketbook pulls together the key facts and figures about the pig and poultry industries in one place. It covers the whole supply chain, from farm to fork, including information about the structure of the industry, prices, production levels, carcase classification, international trade and retail sales.

DOWNLOAD REPORT:- Download this report here

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