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AHDB Pig Market Weekly

15 March 2013

AHDB Pig Market Weekly - 14 March 2013AHDB Pig Market Weekly - 14 March 2013

According to the latest retail data from Kantar Worldpanel, expenditure on pork in the 12 weeks ending 17 February was fairly similar to a year earlier, at £227 million.


Retail Pork Sales Remain Subdued as Prices Rise

The amount purchased, however, was down nearly 6%. Purchases of pork chops/steaks fell 11%, losing out to lamb leg joints in particular. Pork shoulder and leg roasting joint purchases continued to fall compared with last year but loin roasting joints recorded strong growth again this period. More households were buying loin joints as consumers switched from other pork joints and they continue to be popular with two person households.

Annual Percentage Change in Retail Meat Purchases
(12 Weeks to 17 February 2013)

Source: Kantar Worldpanel

Spending on bacon increased 3% over the period, supported by price rises of 5%. The amount purchased, however, was down 3% as quantities per trip and purchase frequency both declined year on year. Expenditure on sausages increased 3% compared to last year. Again this was driven by average price rises, while volume purchases declined 7%. Ham, which accounts for over half of sliced cooked meat volumes, posted sales growth of 1% but a 2% decrease in average price meant that spending dropped by 1%. Volumes have been supported by an increase in the amount shoppers are buying per trip.

In the latest 4 weeks, similar trends were seen, with spending on pork similar to a year earlier and the quantity purchased down 3%. The decline in volume purchases of bacon and sausages accelerated over the 4 weeks. However, the picture for ham looked more positive, with volumes growing 2% and driving expenditure growth of 1%, with loose ham in particular performing strongly.

EU Pig Prices Stable

The average EU pig reference price remained relatively stable between mid-December and the end of February, fluctuating around €170 per 100kg. This contrasts with the normal seasonal pattern which sees prices fall sharply after Christmas before recovering during February. This year, prices fell only marginally in January but increases in February were also modest. Ongoing tight supplies helped to prevent a sharper fall in prices but reports of subdued demand, particularly from export markets, are keeping a lid on prices for the time being. Nevertheless, prices have remained above last year’s level, although the gap has narrowed from over €20 per 100kg in mid January to around €10 at the end of February.

EU Average Pig Reference Price

Source: EU Commission

Although the average price across Europe has remained stable, some Member States have recorded increases in recent weeks. Over the four weeks of February, prices increased by over €8 in Spain and €6 in France and Poland. In contrast, Danish prices were flat during the month while Italy joined the UK in recording falling prices. In euro terms, the fall in the UK reference price was exacerbated by the weakening pound so the gap between the UK price and the EU average fell from around €20 per 100kg at the turn of the year to just €2 at the end of February. When the prices get as close as this, UK prices usually start increasing.

UK Pig Prices

The DAPP turned up for the week ended 9 March with the EU-spec version reaching 155.81p per kg. This was marginally higher than last week and 15p more compared with the same week last year. The small lift this week may mark the start of the seasonal increase which is normally seen at this time of year. This is supported by relatively high EU prices, in sterling terms at least. Throughputs for the week were similar to last week at 161,700 head but this is 4% lower than in the corresponding week last year. Carcase weights were slightly higher at 80.06kg for the week ended 9 March.

GB Finished Pig Prices (DAPP)

Source: AHDB Market Intelligence

The average price of a 30kg weaner reached £47.28 per head for the week ending 16 March, up nearly 40p on the week. Prices continue to move ahead at a slow speed, with the annual difference still around £2 per head.

Growth in cull sow prices continued for the week ended 2 March, with the average price reading 104.40p per kg. This was a 3p up on the previous week but 14p lower compared with last year. The main driver in the sow market remains higher German prices, with French prices also doing well. The lower value of sterling against the euro also contributed to the increase. For the same week, estimated cull sow slaughterings were the highest since mid-January at 5,600 head but this was almost unchanged on a year earlier.

Growth in UK Per Capita Pig Meat Consumption

Based on the balance of production, imports and exports, per capita pig meat consumption in the UK in 2012 was up 2%, or 0.5 kg, in comparison with 2011 and averaged 25.4kg. It was the only red meat to show growth in 2012 and followed a similar increase in 2011. Overall meat consumption in the UK does not change significantly on an annual basis but there are often switches between meats, mainly reflecting changes in supply and price. In 2012 overall per capita meat consumption was up 0.2kg on the year at 79.2kg. Consumption of poultry meat was marginally higher in 2012, up by 0.1kg, and averaged 31.4kg per head. In contrast, beef and veal consumption fell marginally to 18.1kg and lamb consumption fell for the fourth consecutive year to 4.4kg.

UK Per Capita Meat Consumption (Kg)

Source: AHDB, HMRC, Defra

The changes in per capita consumption between 2011 and 2012 largely reflected the differing availability of British product between the two years. Pig meat and poultry meat production were both up on 2011 while beef and sheep meat production was lower. The average retail price of fresh and frozen poultry was up 1% in 2012 but fresh and frozen pork was up as much as 6% based on consumer panel data, although it was still the cheapest red meat. Within the pig meat sector, consumer data suggests there was a switch from fresh and frozen pork to cured products, particularly cooked ham.

Pig Meat Performing Well in Foodservice

According to data from NPD Crest, the total foodservice market remained relatively sluggish during 2012. Total out of home sales increased less than 1% to £50 billion, with growth coming from increased prices. There were bright spots in the industry; sales at quick service restaurants (QSRs) were up by 2%, while sales and visits to pubs were fairly static but increased slightly in the final quarter. One key trend is the growth at breakfast, with visits up by over 8% since last year. High street operators are expected to focus heavily on this meal in the coming year. Pizza/Italian restaurants also continued to grow, as did coffee shops, now expanding into lunch and dinner. The sandwich category also reported strong growth, which is expected to continue into 2013. Meanwhile, visits to full service restaurants were down 2%.

At a topline level, proteins performed well. In particular, there were an extra 50.8 million servings of pig meat compared with last year, with most of these gains coming from the QSR sector. As a result, it made up 28% of all protein servings, making it the most popular protein out of the home. The products driving the increase in servings were bacon, bacon sandwiches and sausages, which all did particularly well in QSRs. These pork products are clearly benefiting from the growing breakfast trend. On the other hand, servings of fresh pork main dishes and ham sandwiches, traditionally consumed at other occasions, declined.

Feed Market Update

Nearby UK feed wheat futures have fallen slightly over the last week, dropping below £200 per tonne. The latest USDA world supply and demand report provided no major changes for either maize or wheat. At home, latest figures from AHDB/HGCA confirm a large fall in plantings of winter cereals, with the winter wheat area down by a quarter. Some further planting may have been possible in recent weeks and the area of spring barley is expected to be larger than usual. The Brazilian soyabean harvest continues at pace, with half the crop now harvested. Due to dry conditions, USDA reduced its estimated Argentinian crop slightly but cut demand by a similar amount.

Small Drop in Producer Share of Retail Prices

The average DAPP came down 3p in February to 156.2p per kg. At this price, producers received 41% of the retail pork price which was down one point from the January figure as, on average, retail pork prices were unchanged. Nevertheless, the producer share remained significantly higher than a year earlier, when it was only 37%. Based on prices in the first half of February, the producer share of the bacon price fell to 35%, also down one point on the previous month, as retail prices rose while farmgate prices for bacon pigs fell.

Percentage of Pork Retail Price Received by Producers

Retail prices were stable across most cuts with the exception of fillet end leg and loin steaks which were down 4% and 3% respectively. None the less, compared with last year, latest figures showed a rise in prices for most of the cuts, although the average price for minced pork was 2% lower. The largest annual price differential came from traditional pork sausages (up 8%) and boneless leg (6%). Smaller increases were recorded for boneless shoulder which was up 4% and fillet end leg, up 3% on the year.

Stable Pig Numbers in Canada

According to Statistics Canada, the total number of pigs on 1 January was similar to a year earlier at 79.1 million head. However, numbers were marginally lower compared with July last year, probably the result of high feed prices since the summer. While the breeding herd also remained unchanged, the numbers of piglets was down by 1%. Although this could indicate a dip in productivity it may reflect fewer sows being farrowed while feed prices remained high.

Canada Hog Inventory, 1 January

Source: Statistics Canada

The number of pigs in heavier weight bands was slightly higher, with the biggest increase among the heaviest pigs. With an almost equal split in trends, the total number of pigs for slaughter remained virtually unchanged at just over 72 million head.

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