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AHDB Pig Market Weekly

12 April 2013

AHDB Pig Market Weekly - 11 April 2013AHDB Pig Market Weekly - 11 April 2013

According to the latest retail data from Kantar Worldpanel, in the 12 weeks ending 17 March purchases of pork declined 6% compared with a year earlier.


Lamb Purchases Continue to Impact Pork Sales

The decline was due to smaller volumes purchased per trip and a reduction in the number of households buying pork. In particular, switching to lamb and poultry meat continued from the previous month. Pork chops/steaks, shoulder and leg roasting joints and pork belly all suffered declines in purchases and spending over the period. However, loin roasting joints continued to post very impressive growth; purchases were up by more than a third, driving expenditure growth of more than half.

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

Source: Kantar Worldpanel

Spending on bacon continued to grow, up 2% compared with a year earlier but the amount purchased declined 1%. Similarly, expenditure on sausages increased 3% on the year, driven by average price rises, but volumes declined. Ham purchases were similar to last year but a decline in average price resulted in a decrease in spending over the 12 weeks.

In the most recent 4 weeks, purchases of pork continued to decline year on year but at a slower rate of 2%. Average prices jumped 9%, driving expenditure up 7%. Spending on bacon decreased slightly as declines in volume purchases accelerated. Sales of sausages also remained behind last year but average price inflation supported expenditure, which was up 6%. Sliced cooked meats showed a more positive picture, with spending similar to last year and the amount purchased up 1%, driven by the continued good performance of loose ham.

UK Pig Prices

The EU-spec DAPP continued to move up for the fifth consecutive week, to reach 158.83p per kg. This is a typical pattern for this time of the year, when pig prices start to rise following their post-Christmas lull. Prices remain well above year earlier levels and for the week ended 6 April, pig producers received 15p more compared with the corresponding week last year. Throughputs for the week are estimated at 153,300 head. Although this is higher than both the previous week and a year earlier, both of these were the week before Easter, when slaughterings tend to be lower. The average carcase weight was 79.76kg, over 1kg more than the same week a year earlier, with the normal seasonal fall in weights still not really apparent.

GB Finished Pig Prices (DAPP)

Source: AHDB Market Intelligence

The weaner market edged up again for the week ending 13 April, reaching £48.83 per head. Some contraction in the weaner supplies have had an impact on the weekly price but improving finished pig prices of late have also contributed. Although the weekly change is very small, the annual difference is much larger at around £3 per head.

The sow market over the week moved up marginally, with the latest sow quotation, for week ended 30 March, at 107.53p per kg. Compared with some notable increases in the last couple of months, the sow price is perhaps beginning to stabilise, not helped by the weaker euro. During the same week last year, the sow price was 17p higher, the largest annual difference so far this year. For the same week, sow slaughterings totalled 4,900 head.

Divergence in the Average EU and UK Pig Price

The EU average pig reference price remained broadly stable over the last four weeks, with the price in the latest week, ended 30 March, at €171.04 per 100kg. At this level, prices were still around €10 higher than the same period in 2012 and were at a similar level to the early part of January this year. The annual gap has narrowed from about €20 in mid-January. Steady pig prices over the month are largely due to subdued demand on the EU market, not helped by the poor weather, and weaker exports.

EU Average Pig Reference Price

EU Commission

Prices in most of the major EU Member States were also broadly stable. Increases in the Spanish prices which started during the earlier part of the year came to an end, with a reduction of €5 per 100kg in the last week in March. Pig prices in France did rise by €5 per 100kg over the last four weeks but Italian prices fell sharply as consumer demand for specialist products, which account for 70% of pigs, was down markedly. While the average EU price fell by just over €1 per 100kg over the four weeks, the strengthening pound in recent weeks resulted in a higher UK pig price with an increase of around €7 per 100kg. This meant that the gap between the UK and the EU prices started to widen again, back to a level closer to the norm historically.

Smaller Fall in EU Pig Meat Production Expected

According to the latest forecasts produced by experts from across Europe, the fall in EU pig slaughterings in 2013 may be slightly smaller than previously expected. The figures, discussed at a European Commission meeting earlier this week, suggest that pig meat production will be 2% lower in 2013 than in 2012. However, this is a smaller decrease than the 3% indicated by previous forecasts. This is partly because production had already fallen more sharply than expected in the second half of 2012, precipitating significant price increases across the EU. However, there is still considerable uncertainty about the forecasts, particularly for the second half of the year, as the impact of animal welfare changes is unclear.

Annual Change in EU Pig Slaughterings

Source: EU Commission Forecast Working Group

At the same meeting, the prospects for future pig prices were also discussed. The general view was that there was unlikely to be a repeat of the sort of dramatic price rises seen last year. Nevertheless, prices were expected to remain high, probably increasing as the year progresses. The ongoing economic crisis is having an impact on consumer demand in the EU, limiting any upward pressure on prices. At the same time, export markets are proving more difficult this year, with the weak yen affecting shipments to Japan and higher production in Russia and China limiting opportunities there.

Feed Market Update

Wheat futures prices increased slightly over the last week, with cold weather in the US plains damaging existing crops and delaying spring plantings. However, the closure of a bioethanol plant removed demand from the UK market, particularly for low quality wheat, meaning delivered prices were slightly down. Overall, soyabean prices were little changed over the last week, having rebounded from falls at the start of the period. There were mixed signals on Chinese demand, while the Brazilian logistics bottleneck is starting to improve, despite recent rains.

Growth in Chilean Exports in 2012

Although not a major pork exporter, Chile has a growing share in some key markets. During 2012, it exported 31% more pork compared with a year earlier. The top four countries accounted for almost 70% of the total export market. Shipments to their primary destination, South Korea, increased 8% on the year. Russia and China also increased demand by a significant amount, with exports to the Russian market nearly quadrupling to 20,000 tonnes. Lower supplies from Brazil, Germany and Denmark was the main factor that encouraged Chilean trade with Russia.

Chilean Pork Exports, January - December

Source: Chilean Customs, GTIS

In contrast, shipments to Japan were 10% lower on the year. This was mainly due to the gradual recovery in the Japanese market after the FMD outbreak and natural disasters in recent years. The EU market imports 6% of the Chilean product, making the country the largest supplier to the EU market. Last year shipments increased by 6%. Exports to Germany were down by 18% but this was offset by a sharp rise in shipments to Italy, making it the second largest EU market.

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