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AHDB Pig Market Weekly


06 September 2016

AHDB Pig Market Weekly - 5 September 2016AHDB Pig Market Weekly - 5 September 2016


AHDB

Percentage of British pork facings back slightly in July

According to the latest Porkwatch data, the number of British pork facings in July 2016 was 1% back, to 82%, on the same period a year earlier, although it was 3% up, to 79%, on the last survey conducted in May 2016. AHDB Pork continually encourages retailers to source Quality Standard pork and pork products. The results are monitored in-store through a bi-monthly Porkwatch survey conducted by representatives of the National Pig Association (NPA). Of all the major retailers, only Lidl increased the percentage of British pork facings on last year, by 7%, to 95%. Asda and Tesco both reduced the percentage of British facings, by 6% and 2% respectively, to 57% and 61%. All the other major retailers stood on at last year’s levels, and continued to offer exclusively 100% British pork.

British bacon facings were 5% back on the year earlier, to 46%. This was largely driven by a fall from Aldi (-19%), Sainsbury’s (-22%) and Tesco (-10%). However, Asda and Lidl both posted increases in the percentage of their British bacon facings, by 20% and 21% respectively. Only Marks & Spencer and Waitrose continued to offer exclusively British bacon. British ham facings were back 2% in July, to 65%, on the year earlier, with a 24% decline from Lidl being the largest mover of the retailers. Sausage facings stood on at last year’s levels, at 84%.

EU production levels back in May

Provisional figures from the EU Commission show that EU pig meat production increased year-on-year in May, up 3% to 1,879 thousand tonnes. However, when adjusted to the same working days, production levels were slightly back on 2015 levels, by 2%. Similarly, clean pig slaughterings were also up in May on the year earlier, by 3% to 20.8 million head, and slightly down when adjusted to the same number of working days, by 2%. The decrease in slaughterings and production illustrates the tightening of supplies during May and during the same period, demand from the Far East strengthened considerably. Therefore, both factors assisted a sharp increase in the EU pig price that was recorded through the May.

There were fluctuations in production levels from the member states. German production was up 1% year-on-year, while Spanish production increased by 11% over the same period. Denmark posted the most significant fall in production levels, at 16%, and the Netherlands saw production fall back by a lesser degree, at 7%.

UK pig prices
The EU-spec SPP rose once again in week ended 27 August, up 1.29p to 137.30p/kg. This takes it back to levels last recorded in February 2015, and the current quote now stands at just under 5p more than at the same point a year earlier. Sterling remains weak against the euro and dollar, helping to boost export demand and subdue imports. This has put a greater demand on tightening supplies, which has continued to support the price.

Estimated slaughterings fell slightly on the week earlier, by 1% to 181 thousand head, which supports anecdotal reports of a slight tightening of supplies. However, estimated slaughterings were up modestly, by 2%, on the same period a year earlier. Average carcase weights also fell back a little on the previous week, by 0.23kg to 81.98kg, which returned it to under the 82kg threshold that had been exceeded the week earlier.

In week ended 20 August, the EU-spec APP also increased, by 0.95p to 138.24p/kg. This is the highest weekly price since February 2015, and brings the current quote to 1.63p higher than at the same point a year earlier. The gap between the APP and SPP decreased modestly, to 2.23p.

Both categories of weaners recorded price increases, with 30kg weaners increasing by £2.36 to £47.88/head. This was the largest weekly increase since January 2015 and returns the 30kg weaner price to levels last recorded in December 2014. 7kg weaners posted a more modest price increase of £0.76, to end at £33.91/head. This returns the current quote to January 2015 levels, and is £1.78 more than at the same point a year earlier.

Northern Irish pig herd records growth
As at June 2016, the total pig herd in Northern Ireland increased by 4% on the previous year, to 595.1 thousand head. This is according to the latest figures from the Department of Agriculture and Rural Development in Northern Ireland. Junes figure is also 12% higher than that reported in December, although much of this is the normal seasonal development between the two surveys.
While most pig categories showed an upward trend, the growth in overall numbers of the pig herd was caused by an increase in the number of pigs for slaughter.

The total female breeding herd recorded an increase of 2% on the year, to 46.4 thousand head. Of this, in-pig sows were up 2%, while in-pig gilts recorded a slightly more modest increase of 1%. The number of maiden gilts only increased slightly, by 1%. This would all infer that a gradual increase in the size of the NI pig herd might occur, although movements would probably remain small.
Results from the English survey are due to be published by the end of September.

EU pig price rise begins to slow
The rise in EU pig prices began to slow going through July and August, with the reference price closing at €163.62/100kg for week ended 21 August. For week ended 21 August, this was the first time a weekly decline, albeit a modest one of €0.05/100kg, had been recorded since April 2016. However, the reference price is still €21.71/100kg more than at the same point a year earlier, having risen €1.09/100kg over the latest four-week period. This price increase rate is significantly slower than that recorded over the four weeks prior to this period.

The slowing of the price increase is suggesting that supply is now at a balance with demand. While supplies have been tightening among many member states, there has also been a decrease in demand. There have been reports of a disappointing barbeque season, particularly in Germany, which has affected domestic demand. However, strong export volumes to the Far East has helped to support this drop in domestic consumption, thereby assisting in stabilising the price.

There were fluctuations in the price changes from major producing member states over the latest four weeks. Germany, Spain and France all recorded modest price increases, but none of them over €1/100kg, while Denmark and the Netherlands saw their pig prices fall back, by €2.60 and €1.99 respectively.
While the UK reference price continues to stand behind the EU price, by just under 9p/kg for week ended 21 August, this fall has not been exacerbated over the latest four-week period, despite the continued weakness of sterling against the euro.

Spanish pork exports increasing over the first six months of 2016
In the first six months of 2016, exports of Spanish pork increased 29%, to 752 thousand tonnes. This increase was spearheaded by exports to China trebling in volume on the same period a year earlier, and they now account for 20% of all Spanish pork exports, growing from 8% in the first half of 2015. With the December census showing a growing Spanish pig herd, the strong Chinese demand provides a welcome opportunity to trade the extra product. Intra-EU exports also recorded a 7% rise in the first six months, with Italian shipments increasing 10%, while Polish exports grew 64% on the same period a year earlier. This growth was somewhat mitigated by falls in shipments to France and Portugal, back 13% and 21% respectively.

The value of Spanish exports grew over the first half of the year, although behind volume growth rates. Values were up 18%, to €1,515 million. Again, much of this value growth can be attributed to the strong Chinese demand, with the Chinese pig prices recording record highs during H1 2016. Despite the increasing European pig price, the value of EU trade was back 3% on the year earlier. However, this time period will take into account the low EU pig prices seen during the first quarter of the year.

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