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AHDB Pig Market Weekly

13 June 2013

AHDB Pig Market Weekly - 13 June 2013AHDB Pig Market Weekly - 13 June 2013

According to the latest figures from Eurostat, pig supplies contracted in March with the number of animals slaughtered in the EU down 6%. However, it is worth noting that there were 2 fewer working days in March compared with last year.


EU Pig Meat Production Stable

As a result, the underlying trend in slaughterings was probably one of stability of even modest increase. This situation broadly continues the pattern from earlier in the year with no real sign of the tightening of supplies expected during the year. Since carcase weights remained almost unchanged, pig meat production also came down by 7% in March but output in the first quarter was up 1% overall, despite the lower number of working days.

EU Pig Slaughtering Trends

Source: Eurostat

The March decline resulted from lower throughputs from most major producers including Germany (4%), Spain (9%) and France (7%). Danish throughputs fell even more sharply, down 18% on March 2012. This decline is partly attributable to increasing weaner exports which have continued from last year. In contrast, pig supplies in Belgium were almost the same as last year, although slaughterings were higher when taking into account the extra working days last year.

Provisional figures for some key member states indicate that supplies have remained broadly in line with year earlier levels during April and May. However, the impact of new EU welfare regulations and high feed prices since last summer, which have led to falls in breeding herds, indicate that a decline in throughputs is still likely in the coming months.

UK Pig Prices

The EU-spec DAPP was only marginally up on the week at 165.26p per kg for the week ended 8 June 2013 but the annual difference remained at nearly 16p. Robust demand for British pork from retailers has maintained strong prices in recent weeks, despite falling EU prices. With the weather improving and continental prices recovering, upward pressure on prices may continue in coming weeks. At an estimated 160,800 head, supplies remained plentiful compared with the same week in 2012. Carcase weights also remained steady in the latest week at 78.85kg but were almost 1kg up on the year.

GB Finished Pig Prices (DAPP)

Source: AHDB Market Intelligence

The weaner market edged up again, reaching £51.56 per head for the week ending 15 June. Firm weaner prices reflect relatively lower costs associated with raising the animal, since feed prices have eased recently. In addition, producer confidence is also a factor, with the strengthening finished pig market as of late. The latest weekly quote for an average 30kg weaner is just over £8 higher than a year earlier. The difference is more evident since prices this time last year were falling.

For the week ended 1 June 2013, the weekly sow price averaged 98.39p per kg. This was marginally up on the week. The small uplift is likely to result from positive movements in the key EU markets. However, sow prices are now almost 19p below year earlier levels. Around 4,000 sows were culled during the week. With the exception of the Christmas period this was the lowest weekly figure in nearly a year, but the level has varied somewhat in recent weeks and overall numbers are similar to a year ago.

OECD-FAO forecast production growth and higher prices for pork

The OECD and FAO have jointly published a report on the World Agricultural Outlook for 2013-2022. In a nutshell, prices are expected to remain above historical averages for both crop and livestock products due to a combination of slower production growth and stronger demand. Global agricultural production is expected to grow 1.5% a year over the coming decade, compared with annual growth of 2.1% between 2003 and 2012. However, production shortfalls, price volatility and trade disruption remain a threat to global food security. The risk of price volatility is amplified by low stock levels, meaning widespread weather issues, such as those experienced last year, could raise global prices by up to 40%.

Pig meat production is expected to rise by around 13% over the decade, with growth slowing later in the period. Around 80% of the growth is expected to come from developing countries, which will account for nearly two-thirds of output by the end of the period. Consumption growth will slow as major developing economies approach the levels of developed countries; per capita pork consumption in China is expected to overtake the EU, although it will remain lower than in some EU countries. Pig meat prices are forecast to rise in the near term and then decline for several years before rising again, with a moderately upward trend over the period as a whole.

Producer Share of Retail Price Near Record High

The average producer price for pigs in May reached just over 164p per kg, up 3p month on month. At the same time, the average retail pork price also increased by a similar amount but this represented a smaller percentage increase. As a result, producers received a little over 42% of the retail price, marginally higher than the previous month but the highest share in nearly four years and the second highest on record back to 2004. The latest figures indicate a 3% rise in producer share compared with the same month in 2012. Bacon prices for May have not yet been released but the April data showed that the producers received 37% of the retail price. This was an increase of over one percentage point on the month with a similar gain compared with April 2012.

Percentage of Pork Retail Price Received by Producers

In May, some pork cuts recorded a month-on-month increase in retail price of around 2% including legs, fillet and loin chops. While prices for loin steaks and pork sausages remained unchanged, prices fell by 2% for shoulder and mince. Compared with May 2012, most cuts were more expensive. The largest increases were recorded for traditional pork sausages (9%), fillet end leg (8%), and diced pork (6%). Increases in the other cuts were smaller, while minced pork and fillet of pork prices came down 5% and 3% respectively.

Feed Market Update

New crop feed wheat prices were down nearly 4% in the latest week to close at £172.25 per tonne on Tuesday. Increased domestic ending stocks have contributed to the fall, along with easing global prices. The latter reflects favourable conditions in Australia and the Black Sea region and improving weather in the US, with concerns over maize plantings now easing. Soya prices increased slightly over the week as concerns remain about US planting progress, although there is still time for it to catch up. Nevertheless, with much of the record South American crop still to be moved and a large US harvest expected, the outlook for soya meal prices is potentially bearish.

Growth in US Production and Prices since April

As expected, first quarter throughputs and production in the US were down 1% compared with the same period in 2012 at 27.9 million head. However the situation soon changed in April when 6% more animals entered the supply chain compared with a year earlier. This is likely to be the result of a higher pig crop in the second half of last year, with the earlier Easter also contributing. In light of the increase in April, the total number of pigs slaughtered between January and April was up 1% on the year at 37.2 million head. In contrast, carcase weights were marginally lower during the same period and therefore pig meat production remained almost unchanged. In the first four months of the year, 3% more sows were slaughtered at 990,300 head.

US Pig Slaughterings

Source: USDA

Despite lower output during the first quarter, the year started with prices again below year earlier levels reaching $54.28 per 100lb lw in March. Subdued foreign demand for US pork was the main factor that supressed prices, with lower shipments to the Asian, Mexican and Russian markets, in particular. However, prices strengthened during April and May, reaching $65.50 per 100lb in the fifth month. Latest USDA forecasts show that US production is likely to increase 1% for 2013 as a whole, due to a continued improvement in productivity and a possible easing in the cost of production. While increased supplies may put pressure on prices, an estimated 3% increase in domestic consumption is likely to hold pig prices up at levels close to last year.

New Physical Performance Data Released

Latest data on the physical performance of GB breeding pigs, provided to BPEX by Agrosoft, show further improvements in productivity in the year to March 2013 for the best performing herds. However, overall, the number of pigs weaned per sow per year was 22.6, marginally lower than in the year to March 2012. The overall fall was largely due to an increase in mortality rates with the number of pigs per litter and number of litters virtually unchanged. Indoor breeding herds fared better, with the average number of pigs per sow rising to 24.1 in the year to March 2013 from 23.6 a year earlier.

In contrast to the overall situation, the average number of pigs per sow per year for the top third of producers was up from 25.6 to 25.7 while the top 10% improved their performance from 27.4 to 27.7. Both these groups recorded slightly larger average litter sizes in the latest 12 months.

The latest figures also show an improvement in the rearing/finishing herd, with the average Feed Conversion Ratio down to 2.40, compared with 2.44 a year earlier. Post-weaning mortality fell from 5.4% to 4.9%.

BPEX Yearbook 2012-2013

The new-look BPEX Yearbook for 2012-2013, detailing all the work being carried out by both BPEX Knowledge Transfer and Research and Development, has now been published. There are also sections which take a look at the industry in figures. These cover everything from performance trends over five years and cost of production data to carcase weights and average back fat measurements.

June 2013

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