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UK Outlook for Pig Meat Supplies

01 November 2012

UK Outlook for Pig Meat Supplies - November 2012UK Outlook for Pig Meat Supplies - November 2012

According to the 2012 June Survey of Agriculture and Horticulture, the UK pig herd was slightly larger than a year earlier. However, the size of the female breeding herd was slightly lower than in June 2011 at 425,000 head, despite a small increase in in-pig sows and gilts. The number of maiden gilts was up nine per cent at 82,000 head.
Outlook for UK Pig Meat Supplies

However, the timing of the June census meant that it was taken before the recent rapid rise in feed prices. This has meant that the cost of pig production has risen sharply, meaning that most producers have remained in a loss-making position. For some this has led to a decision to leave the industry entirely, while others have decided to reduce the size of their breeding herds to mitigate rising losses.

According to AHDB estimates, between mid June and mid October the number of sows slaughtered was around 14,000 higher than in the same period last year. With market conditions little different in other respects, this is likely to be the result of producers’ decisions about liquidating or temporarily destocking herds. This suggests a fall in the breeding herd is likely between June and December, the next point when a census will be carried out. The decline may amount to 20,000 head by then, taking the breeding herd to around 405,000 animals.

Pig prices have risen in recent weeks. If this rise is sustained then further losses in the pig herd may be limited. However, with feed prices expected to remain high until next summer, at least, expansion is also unlikely. Therefore, the breeding herd may be stable through the first half of 2013 before some modest expansion in the second half of the year, although much will depend on price movements for both pigs and feed.

With the breeding herd stable until recently, increases in clean pig slaughterings can be attributed to improving productivity. This trend has continued and in the first nine months of 2012, the number of pigs slaughtered per sow averaged 22.4, compared with 21.8 in the same period last year. The factors driving these productivity improvements are still in place and so further gains are likely in future years, although the rate of improvement may slow somewhat. Recent disease issues in some parts of the country may contribute to this slowing.

One of the drivers of improved productivity has been a higher rate of replacement of older sows with new gilts, meaning that the breeding herd is younger than before. This is likely to continue, although further significant rises in the replacement rate are unlikely. This suggests that, once the current raised level of liquidation/destocking passes, sow slaughter will return to a similar level to that seen last year. However, this will be dependent on cull sow prices remaining firm. It is possible that prices could fall around the turn of the year if there is additional culling in the EU as a result of the ban on gestation stalls.

Carcase weights for clean pigs have been lower than in recent years over the summer. This is attributed to producers marketing pigs early to mitigate rising feed costs and improve cash flow. With pig prices having risen more recently, carcase weights are now close to year earlier levels. If pig prices remain high then weights may stay close to seasonal norms but they are unlikely to resume their upward trend of recent years.

Slaughterings of clean pigs for the remainder of 2012 will not be affected by the anticipated fall in the breeding herd, since these pigs were born to sows served before feed prices began to rise. This means that the increase in slaughterings recorded so far this year should continue in the fourth quarter. Slightly lighter carcase weights will be offset by increased sow slaughterings meaning that the rise in pig meat production will be similar to the rise in slaughterings, around three per cent. Clean pig slaughterings for 2012 as a whole are expected to pass 10 million head for the first time since 2002.

Looking ahead to 2013, the expected reductions in the breeding herd should outweigh productivity improvements, leading to a two per cent drop in clean pig slaughterings for the year as a whole. Sow slaughterings and carcase weights are likely to return to more normal levels so pig meat production will also be down by about two per cent. The decline will accelerate as the year progresses when the full impact of the fall in the breeding herd will be apparent.

So far this year, UK pork and bacon imports have been below last year’s level, partly due to lower requirements given higher UK production. However, this has been offset by increased imports of processed pig meat products, including sausages. Overall, pig meat imports have been marginally higher than in 2011 and this situation isn’t expected to change substantially during the remainder of 2012. Looking forward to 2013, supplies are likely to be tighter across the EU, with production forecast to be down by two per cent or more. This means that, despite increased demand as a result of lower UK production, imports are likely to be slightly down on this year’s level.

UK pig meat exports in 2012 have been little changed compared with a year earlier. However, exports to China, which only commenced in June, mean that a modest increase is likely for the year as a whole. Next year, tighter supplies may limit export potential, perhaps leading to a modest reduction in shipments for the year, even allowing for increased demand from EU and global markets.

The balance of production, imports and exports suggest that there have been slightly higher supplies available for consumption in the UK this year. However, this is not reflected in consumption data which have been little changed from last year. Supplies are likely to be tighter next year, resulting in lower consumption, particularly if retail prices increase in response to higher pig prices.


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