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Hog Prices Show Modest Improvement

31 January 2013

UK - The price of hogs sold through auction markets has shown a modest improvement this week, with the lift greater in Scotland than across GB as a whole.

Despite the snow in many parts of the country, the number of lambs sold through the auction markets in the first half of the week was higher than last week. This continues a trend which started in December.

“December was the first month since June that UK lamb slaughterings were higher than the year before, although in Scotland the kill remained lower,” said Stuart Ashworth, Head of Economics Services, Quality Meat Scotland. “As January settles down after the holiday disruption the volume of hogs reaching the market is continuing to run ahead of last year.”

A higher volume of hogs and a better price suggests an underlying improvement in the market conditions. However, despite the improvement, prices still languish some 50p/kg lwt lower than twelve months ago.

Deadweight price reporting abattoirs show some improvement in the quality of lambs/hogs handled between December and January. This, said Mr Ashworth, combined with the weakening of Sterling from 81p to a Euro in mid-December to 84p in mid-January, will have offered some support to hogg prices through January. Nevertheless, the export market, particularly in France remains tough.

In the Southern Hemisphere slaughter volumes are running ahead of last year.

“In New Zealand slaughter numbers in October and November were 15 per cent higher than last year, a greater increase than would be expected from the 5-6 per cent increase in lamb crop,” said Mr Ashworth. “Poor producer prices and a strong currency, offering little prospect of improved prices in the near future, are encouraging earlier marketing of New Zealand lamb at lower weights.”

This increased production has led to a growth in exports to Europe in the final quarter of 2012 but also growth in New Zealand exports to China. However, he observed, New Zealand lamb slaughterings usually peak in February or March.

“This year, with Easter being early and New Zealand lambs continuing to come forward more quickly than last year, it seems likely that first quarter deliveries from New Zealand will be higher than last year although growth in sales to China may temper this,” Mr Ashworth added. “However, earlier slaughtering will mean that as the New Zealand season progresses things may slow down.”

Looking at the domestic market, an early Easter and reported problems from Schmallenberg among early lambing flocks in southern England will mean less competition from UK new season lamb. This is likely to offer some support for hogg prices at this time.

On the exchange rate front, money market sentiment, which can change very quickly, is currently swaying towards a general weakness of Sterling which will help sheep meat exporters and hopefully producer prices.

“The latest announcement of UK GDP growth will do little to change money market sentiment and early reaction has pushed Sterling to 85p to the Euro,” added Mr Ashworth.

ThePigSite News Desk

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