United Kingdom Pig Meat Market Update – December 2011

13 December 2011, at 12:00am

Unusual pig meat price movements have occurred in both the UK and EU this year, according to Stephen Howarth, Senior Analyst (Pigs), AHDB Market Intelligence, in his latest explanation of the UK and EU trends. In the UK, prices are up on last year and feed prices are down although the UK pig reference price premium over the EU average has narrowed. The overall stability in the EU average pig reference price, which has been apparent since May, continued through the first half of October, over a period when a peak and then decline form the usual pattern.

UK Prices

The monthly average DAPP for October was little changed from September at 145.52p per kg deadweight (dw). After falling seasonally, prices stabilised in the first half of October, significantly earlier than in recent years, before rising later in the month and into early November. As a result, the October price was nearly seven pence higher than in October 2010. The recent rise has taken the DAPP to 147.48p per kg in week ended 19 November, more than 11 pence higher than the same week last year. The price increase has come despite supplies remaining relatively high. Robust demand in anticipation of a positive Christmas market, strong export demand and high EU prices have all played a part in driving prices higher.

The premium for the UK pig reference price compared with the EU average has remained at about 6p per kg since early September. This is much lower than the premium seen for much of the last two years, which averaged around 16p per kg, although it is higher than it was during the spring, when UK prices were briefly lower than the EU average.

Carcass weights of pigs in the DAPP sample decreased slightly in October, against the normal seasonal trend. The average weight through the month was 79.3kg. This is less than one per cent below the September average but is one per cent lower than in October 2010. Carcass weights have remained slightly above 79kg during November, around 1kg lower than a year earlier.

Weaner prices have also begun to strengthen, having hit a low point of around £40 per head in mid-October. The average price for the month was £40.31 per head, marginally below the September average but prices have since increased, reaching £42.17 by week ended 19 November. This is virtually the same as a year earlier, when prices were falling. Recent reductions in the price of feed have meant that demand from finishers has increased.

Cull sow prices continued on the upward trend seen since June. This is mainly due to strong export demand as supplies are tight on the continent, whilst demand from manufacturers is high. The average price during October was 108p per kg, two pence higher than in September and eight pence higher than a year earlier. The price rise accelerated into November, reaching 115p per kg by week ended 19 November, the highest figure for more than two years. This comes as there are reports of increasing demand from UK processors, given the lower cost of sow meat at a time when consumers are price-conscious.

EU Prices and Exchange Rates

The general stability in the EU average pig reference price, which has been apparent since May, continued through the first half of October. This is a very different trend to that seen in recent years, where prices have normally peaked in the summer before falling back rapidly during the autumn. By the end of October, prices are typically 12 per cent lower than in mid August; this year, they had fallen by less than one per cent. Although supplies have been tighter in some Member States, the higher price is largely driven by export demand from non-EU markets, particularly in the Far East. The October average EU price stood at €156 per 100kg dw. This is around €19 higher than in October 2010. From late October, prices began to ease higher, at a time of year when they are normally still falling. By week ended 20 November, they had risen above €160 per 100kg.

Economic uncertainty has led to fluctuations in the exchange rate between the pound and the euro. However, the net result has been little change in the rate, which has remained close to €1.14 for much of the year. During November, the euro has weakened as a result of the sovereign debt crisis, and the exchange rate reached close to €1.17 by mid month.

UK Slaughterings and Pig Meat Supplies

Clean pig slaughterings in the UK totalled 994,000 head in October 2011. This was six per cent higher than in October 2010. Throughputs were higher across all parts of the UK, but the largest rise was in Scotland, where 68,000 pigs were slaughtered, 19 per cent more than in the same month last year. Northern Ireland recorded more modest growth, up just one per cent to 159,000 head.

AHDB estimates for October are that sow slaughterings remained above year earlier levels, totalling 24,000 head, a rise of 10 per cent year on year. High prices are still encouraging producers to replace less productive sows. This brings the estimated slaughterings for the year to date to 203,000 head, 14 per cent higher than during the first 10 months of last year.

Continuing the pattern of most recent months, the average clean pig carcass weight during October was slightly lower than a year earlier. The October average was 78.2kg, which was 1.2kg lower than in the same month last year. The average carcass weight for cull sows was 154.8kg in October.

Total pig meat production in October was 82,000 tonnes, up four per cent compared with the same month last year. This brought the total pig meat production for the year to 677,000 tonnes, six per cent higher than during the same months of 2010. With carcass weights slightly down on last year, this rise was driven by increased throughputs, with clean pig slaughterings for the year totalling 8.2 million head, also six per cent higher than last year.

UK imports of fresh and frozen pork during September 2011 totalled 30,000 tonnes. This was eight per cent lower than in September 2010. The five largest suppliers shipped lower amounts than a year earlier, with the biggest fall being in imports from Belgium, which were down by 39 per cent. This was partly offset by increased volumes from France, Spain and Italy. Shipments of bone-in hams were higher than a year earlier but most other fresh pork cuts were imported in lower quantities. There was an increase in frozen shipments, although they only accounted for 17 per cent of the total.

Once again, bacon imports in September were slightly lower than a year earlier, although the difference was only one per cent. A fall in shipments from the two largest suppliers, Denmark and the Netherlands, was largely offset by increased volumes from Germany and smaller suppliers such as France and Ireland. In contrast, imports of sausages were up by 38 per cent, largely due to a massive increase in imports from Ireland, which more than trebled compared to September 2010. France and Spain also shipped much higher volumes.

Despite September’s fall, imports of fresh and frozen pork for the first nine months of the year were five per cent higher than in the same months of 2010. The growth has been driven by shipments from Denmark, up by 28 per cent. Germany and Ireland also recorded increased imports but the Netherlands and Belgium shipped lower volumes. In contrast, bacon imports were down by 13 per cent year on year, with all major suppliers experiencing reduced shipments. Given that bacon consumption remains strong, this suggests that more imported pork is being cured in the UK.

Exports of fresh and frozen pork from the UK in September were nine per cent higher than in September 2010 at 14,000 tonnes, the second highest monthly total on record. As in most recent months, growth in exports to Hong Kong/China was a significant factor. However, there was also significant growth in volumes sent to some EU Member States, including Belgium, Denmark, France and Cyprus. In contrast, Ireland and the Netherlands took less British pork, whilst shipments to Germany were virtually unchanged compared to September 2010.

Pork exports for the first nine months of the year were up 17 per cent on the same period last year, totalling 108,000 tonnes. Germany remained the largest market, with shipments being four per cent higher than year earlier levels. Volume growth was seen in most significant markets, with only Ireland, the Netherlands and Italy taking less British pork.

Feed Prices

LIFFE wheat prices for May 2012 delivery have fallen over recent weeks as the markets react to uncertainty over the economic situation in the Eurozone. On 22 November, the price stood at £146 per tonne, down £9 per tonne since the end of October. French wheat prices have also declined over this period dropping €8 per tonne to €175 per tonne on 21 November.

The first supply and demand estimates for 2011-12 have been published by DEFRA. Feed usage of wheat is expected to increase five per cent year on year to 6.45 million tonnes. This offsets a projected decline in human and industrial usage, four per cent lower than 2010-11 at 6.91 million tonnes. Increased usage of wheat rather than barley in feed, due to price differentials, is a key reason behind this.

The Early Bird Survey produced by Andersons on behalf of HGCA/AHDB suggests that the 2012 wheat area will be unchanged at 1.97 million hectares. Increases are forecast in winter barley (up five per cent), oilseed rape (up seven per cent) and oats (up six per cent). Spring barley (down six per cent), pulses (down 22 per cent) and arable fallow (down 12 per cent) areas are predicted to reduce.

Strategie Grains has estimated that European wheat plantings for harvest in 2012 will be one per cent higher year on year at 23.2 million hectares. Wheat production is forecast at 135 million tonnes, four per cent above 2011 levels as yields are expected to increase. Barley plantings are expected to be lower at 4.55 million hectares, but higher yields could mean that production will still be higher.

The 2011 Russian grain harvest yielded 92 million tonnes clean weight, up from 61 million tonnes in the drought-hit 2010 season but less than 2009 levels. Ukraine’s grain harvest has reached 54.1 million tonnes compared with 41.2 million tonnes in 2010. A higher maize crop is responsible for the increase; at 22 million tonnes, it is double the 2010 harvest.

The USDA November forecasts put 2011/12 global wheat production 2.1 million tonnes higher than previously at 683.3 million tonnes with increases recorded in the EU and Kazakhstan. Global demand is forecast at 676.8 million tonnes, up 2.4 million tonnes in 2011/12 as feed demand increases.

Global maize production is forecast to reduce by 1.1 million tonnes in 2011/12 to 860 million tonnes as the US crop is expected to be lower. However, demand for maize in the US is forecast to reduce by 2.5 million tonnes due entirely to lower feed demand. High prices relative to wheat are anticipated to discourage demand for maize. For oilseeds, global soybean production in 2011/12 is forecast at 258.9 million tonnes, down marginally from October’s estimates.

UK FEMAS soyameal prices, ex-mill Liverpool, were quoted in week ended 19 November at £288 per tonne, down £1 per tonne on the previous week, and almost £20 per tonne lower than at the start of the month. Rapeseed meal prices increased £2 per tonne to average £155 per tonne for ex-mill Erith. However this was £5 per tonne lower than the levels at the end of October.

With prices for most components of pig feed falling, the average cost of production has begun to fall. Average costs in November are estimated to be about 3p per kg below those in October, with a further fall of 2p expected in December. Nevertheless, the November figure remains around 10p per kg below the DAPP, equivalent to a loss of around £8 per pig. The recent falls in feed prices could improve the situation but further falls will be needed for producers to return to a profitable situation.


In the 12 weeks to 30 October 2011, the amount of fresh and pork purchased was up two per cent compared to the same period last year, while expenditure increased by seven per cent due to increased average prices. A major driver of the overall rise was increased purchases of loin roasting joints, up 41 per cent, driven by increased promotional activity. Other roasting joints sold in lower quantities due to fewer price promotions than a year ago. Purchases of pork belly were up by six per cent but households bought four per cent fewer loin steaks.

In the latest four-week period, households purchased eight per cent more fresh and frozen pork than a year earlier. Slightly higher prices meant expenditure was 10 per cent higher. Pork took market share from all other major meats, as overall purchases of meat were three per cent lower on the year. Sales of most cuts increased, with loin and shoulder roasting joints leading the way, with volumes up by 86 per cent and 23 per cent respectively. Purchases of pork belly were 15 per cent higher, whilst nine per cent more chops were sold. In contrast, purchases of frying steaks were down by eight per cent, whilst those of leg roasting joints were little changed.

In the latest four-week period, three per cent less bacon was purchased than a year earlier, although spending on bacon was slightly up as prices rose by four per cent. However, over the last 12 weeks, household purchases were still one per cent higher than a year earlier. Most processed pig meat products also recorded increased purchases in the last 12 weeks, with sausages up by four per cent and sliced cooked meats up by six per cent.

Trends in retail meat purchases (period ended 30 October 2011)

December 2011