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AHDB Pig Market Weekly


01 October 2015

AHDB Pig Market Weekly - 1 October 2015AHDB Pig Market Weekly - 1 October 2015


AHDB

US pig herd recovery is complete

As at 1 September, the US pig herd had increased to 68.4 million head, according to the latest Hogs and Pigs report published by USDA. This was 4% up on the same point in 2014 and 2% higher than the previous quarter and represented the largest herd since quarterly estimates began in 1988. A year before, the effects of the PEDv outbreak were still lingering, which was having a knock on effect on the number of pigs available for slaughter. However, it appears now that the US herd in general has now recovered. While all weight bands recorded an increase in September, compared to a year previously, pigs in the heaviest weight band of 180 pounds (82kg) and over had decreased compared to the previous quarter.

The US breeding herd and the number of piglets both recorded a 1% increase in September, compared to the previous year. However, the number of sows farrowing between June and August decreased by 2% year on year, with estimates of sows farrowing for the next two quarters decreasing as well. Although supply was short and demand was high when PEDv took its toll, it appears that supply has picked up and demand has steadied off, so pig prices have fallen. The latest USDA cold storage report has recorded that as at 1 September there was 297,600 tonnes of pork in storage, 21% more year on year, suggesting that prices may be staying low for some time. Nevertheless in the latest quarter, the average number of piglets weaned per litter reached a record high of 10.39, 2% up on the year, confirming that the US herd performance has largely recovered from the effects of PEDv.

Danish pork exports continue to grow

Danish pork exports for the first six months of 2015 continued to show modest growth, with levels totalling 555,000 tonnes. The signs of growth which were recorded in the first quarter of 2015 mean that the total figure for the half year was up by 1% on the same time period in 2014. Despite this rise, the total value fell by 9% to DKK8.4 billion (€1.1 billion). The EU remains the primary market for Danish pork, with exports increasing 3% on the corresponding time frame in 2014. The rise in sales to Poland, Italy and the UK, by 7%, 15% and 10% respectively, was enough to offset the 2% decline to Germany.

Exports to non-EU markets decreased by 3%, with Japan remaining as the largest such market, despite a reduction of 25%. This drop in exports to Japan is partly a result of the country’s domestic production recovering from outbreaks of PEDv in 2014. Australia continued to be a major growth market, with purchases for the first half of 2015 more than a quarter up on 2014. The majority of this growth was recorded in the first quarter, with exports increasing at a slower rate in the second quarter of the year. Unlike some other EU exporters, growth in shipments to China was a modest 12%.

Following recent trends, Danish live pig exports have continued to grow, reaching over 6.5 million head for the first half of 2015. Sales increased by 10% as farmers choose to sell more of their weaners to be finished at a cheaper cost in other countries. In total, 1% more pigs were shipped to Germany, while Polish purchases rose by a further 27%, maintaining its position as the main growth market.

UK pig prices

The EU-spec SPP fell for the fourth week running, by a third of a pence to 130.07p/kg, in week ended 26 September. This was the lowest recorded price since the SPP series began in April 2014. Nevertheless, the decrease in price was not as much as in the three previous weeks, as the estimated number of pigs slaughtered decreased by 9,500 head compared to the week before. The average carcase weight also decreased by 150g on the week to 81.56kg and was down by 400g compared to the same week in 2014. The current price remains just over 25p less than it was then, although the gap did narrow slightly due to a larger fall in the equivalent week last year.

The EU-spec APP also decreased, by 0.88 to 134.45p/kg, in week ended 19 September. This was 24p less than the same week in 2014. The gap between the SPP and APP stayed at just over 4p, although reducing slightly as the APP recorded a larger fall.

In the week ended 26 September, 30kg weaner prices were down £1.70 compared to a week previously, to £43.51 per head. However, this is within the range of variation seen in recent months, suggesting the market remains relatively balanced. In contrast, 7kg weaner prices were up slightly on the week, by 22p to £32.60 per head. Both the 30kg and 7kg weaner prices are down considerably compared to the same week in 2014.

Balancing feed conversion and weight gain

The increased performance of the GB pig herd in the last year was driven more by improvements with the feeding herd than the breeding herd. Certain key performance indicators for the rearing and finishing herds, such as the feed conversion ratio (FCR), improved in the year to June 2015 compared to the previous year. For the finishing herd, the FCR decreased by 3% from 2.66 to 2.58 with the rearing herd recording a more modest decrease of 1% year on year, to 1.71. However, a better FCR can come at the expense of daily weight gains.

Spanish pig sector continues to grow

Spain has long had one of the EU’s largest pig sectors and the latest census results show that its share of the EU herd is increasing. Its sow herd has been the biggest in Europe for many years and has increased further over the last two years. During the same period, the total pig herd increased by nearly 10% and is now only 4% smaller than the German herd, the EU’s largest. One of the reasons for the strong growth is that pig prices are generally at or above the EU average, while production costs are lower than its EU competitors.

Feed Market Update

UK Nov-15 wheat futures closed at £115.50/t on Tuesday, £4.10 up week on week. Chicago wheat and maize futures also followed the upward trend. UK feed wheat futures (Nov-15) recorded the largest one day gain since early July last Wednesday, with similar increases to the Chicago and Paris milling wheat futures. The increase in prices stemmed from worries over winter planting in the Black Sea region, where dry weather is causing concern. On Monday, the final UK balance sheet for the 2014/15 season was published. Wheat used for animal feed was up 11%, while barley usage reduced by 5% compared to 2013/14 season. The usage of maize and oats for animal feed also decreased. End of season closing stocks for all cereals increased by 28% compared to 2013/14.

Chicago soyabean futures prices (Nov-15) closed on Tuesday at $153.15/t, $3.35 up on the week. Paris rapeseed futures prices also increased on the week. However, UK rapemeal (34%, ex-mill, Erith) prices fell for the sixth week running on Friday, down by £1 on the week to £159/t. It was a similar story for Brazilian soyameal (48% ex-store, Liverpool), falling by £2 to £281/t but Hi-pro soyameal (ex-store, East Coast) increased by £1 to £265/t. Weekly US soyabean harvest progress figures came in above analysts’ expectations on Monday, with 21% of soyabean area harvested against an average expectation of 18%. Rapeseed sowings for 2016 in the EU, the biggest grower of this commodity, are unlikely to beat last year’s levels, according to the IGC. Further, the dryness in Ukraine has not just affected the sowing of grains but of rapeseed too.

Places still available at Grain Market Outlook

With pig prices currently so low, developments in the feed market have never been more important for pig producers. The outlook for cereals and oilseeds markets will be presented at the AHDB Grain Market Outlook Conference on Wednesday 14 October at the Grange Tower Bridge in London. Other speakers will focus on the global macroeconomic outlook and TTIP, the trade deal currently being negotiated between the EU and US.

September Pig Market Trends out now

The September edition of Pig Market Trends (PMT) was published on Tuesday. As well as the usual summary of developments in the UK and EU pig markets and the global feed market over the last month, the latest issue includes more detailed articles on:
• June survey pig herd results for England & Northern Ireland
• Balancing feed conversion and weight gain
• EU pig census results
• Growth of the Spanish pig sector
Pig Market Trends is available free of charge. You can subscribe by e-mailing redmeat.mi@ahdb.org.uk. Recent editions can be downloaded from the AHDB Pork website.

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