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AHDB Pig Market Weekly

12 July 2013

AHDB Pig Market Weekly - 11 July 2013AHDB Pig Market Weekly - 11 July 2013

According to the June census published by the USDA, the number of pigs totalled 66.6 million head. This was virtually unchanged compared with the same month in 2012 but 2% up on the March 2013 inventory.


Stable pig herd in the US

Typically, pig numbers are higher in June than in March as sow productivity in the spring is normally higher than in the colder winter months. Pigs for finishing levelled at 60.8 million in June despite a 1% reduction in pigs of less than 27 kg. However, this was more than offset by increased pigs in the heavier weight band compared with June 2012.

There was a marginal uplift in the breeding herd, to 5.88 million head, and it was also up, by 1%, compared with March 2013. Pig breeders have been largely keeping any expansion plans on hold until the outlook for feed costs becomes clearer. Sow productivity increased further in the latest census. The average pigs saved per litter was a record high 10.31 for the March to May period. The large difference in productivity by size of operation remained, as 10.40 pigs were saved per litter for large operations with more than 5,000 pigs. In contrast the smallest operations with less than 100 pigs saved only 7.70 pigs per litter. Intended sow farrowing during the June to August quarter is expected to be slightly down on the year; however a 1% increase in the following quarter is likely to hold production up. In January-May 2013 total US pig slaughtering were marginally up on a year earlier at 46.5 million.

EU weaner prices back above last year’s level

Until recently, EU weaner prices have broadly followed the normal seasonal pattern this year. Prices rose from the start of the year to peak in March at just over €52 per head. This was fractionally higher than last year’s peak. The unexpected weakness of the finished pig market then led to prices falling back more sharply than last year, so that by late May, the average price was €2.50 below its level a year earlier at €45. However, some recovery in finished pig prices, coupled with the recent drop in feed costs, have since led to a modest upturn in prices. This has come earlier in the year than would normally be the case. In the latest week, ending on 30 June, the average price moved back above its level a year before at €46 per head.

Weaner prices in most major member states followed a similar trend to the EU average over recent months. The UK was one exception, with prices increasing steadily since February. Prices in Denmark and Poland were more stable than elsewhere, with demand from Polish finishers remaining firm. With recent declines in the Polish breeding herd, weaner supplies were tight and demand for Danish imports was still strong.

UK pig price

The EU-spec DAPP increased again for the week ended 6 July to 168.53p per kg. This was up 0.35p on the week while the annual gap reached 18p the largest since July 2009. Favourable weather partly held up prices, although barbecue demand has not been especially strong, but tight supplies were a more important factor. UK clean pig slaughterings totalled 151,300 head just over 7,000 down on a year earlier although up 4,600 on the previous week. Carcase weight came down almost 200g from the previous week to 78.87kg.

The price of a 30kg weaner has now risen continuously since the start of February and for the week ending 13 July reached £53.88 per head. The weaner market continued to reflect strong producer confidence and a strengthening finished pig market. The latest quote was almost £13 higher compared with the same week in 2012 and up £7.60 compared with early February this year.

For the week ended 29 June 2013, the cull sow market moved up by as much as 3p pushing the average up to 106.27p per kg. The week on week increase was the largest since March 2012. Recovery was due to improving markets across the EU and a fall in UK supplies. The latest increase narrowed the yearly difference to just over 7p. For the same week, the number of sows culled totalled 4,200 head, a little up on the year but down over 800 on the previous week.

Lower Polish pig meat imports

There has been some easing back in Polish pig meat imports in the first quarter of 2013 while exports have shown further growth. Lower domestic demand contributed to this development plus the fact that pig meat production over the period was only 1% lower than a year earlier.

Imports of fresh and frozen pork were down 3% on the same period in 2012. Approximately 29% of this total was imported from Germany although shipments were 9% lower than in January-March 2012. There was also a significant reduction of 11% in imports from Denmark in contrast to a 12% rise from Belgium. Imported pork is mainly utilised by further processors and their sales have been falling.

Pork exports increased by 14% in the first quarter of 2013. China has emerged as a new market to become the second largest. Shipments to Japan almost doubled and there was an 80% rise in trade with Italy. In contrast exports to Belarus were sharply down.

The only small decline in production occurred in spite of the sharp fall in the breeding herd. However, imports of both pigs ready for slaughter and weaners for finishing by Polish fatteners have been increasing in recent years. Weaner imports increased by 26% to 748,000 head in the first quarter of 2013 and trade in slaughter pigs more than doubled to 227,000 head. The main supplier was Denmark with a 52% market share of the total live trade. Polish pig meat production is expected to show a more marked reduction during the remainder of the year as the breeding herd is continuing to decline.

Feed market update

UK LIFFE wheat November -13 futures contracts were worth £169.45/t at close on Tuesday 9 July, up by £4.20/t on the week. December-13 CBOT maize futures rose by nearly $7.50/t, to $205.41/t (£138/t). Price increases have been demand driven after US wheat futures prices had pushed recent lows. US maize conditions continue to improve, with a further 1 percentage point increase to 68% for crops in good or excellent condition.

The EU Commission raised its estimates for EU grain production in its latest report with higher output than last year expected for all the key crops. For Australia the National Australian Bank (NAB) reduced its forecast of wheat production it although it would still be higher than in 2012/13.

The CBOT (Dec-13) soyameal price also closed higher on Tuesday 9 July at $417.55/t, up $13.50/t on the previous week. Hi-Pro soyameal (ex-store East Coast) as at last Friday was £406/t for early July movement, down £2/t on the previous week.

The EU Commission currently estimates the EU-28 oilseed area (which includes soyabeans, sunflower seed and rapeseed areas) up 6% from last year although yields are expected to be lower.

To read more about the latest developments in the feed market click here.

Global pig meat trade expected to fall this year

Global trade in pig meat is forecast to decrease by 0.3m tonnes or 4% in 2013 after increasing by 0.2 million tonnes in 2012 according to the June FAO Food Outlook report. This is because the expected drop in production from exporting countries combined with increased output from importing countries will reduce the need for trade this year. The contraction is in contrast to the expected further growth in the total global meat market of 0.3m tonnes or 1% given increases for all other meats. Trade in beef and sheep meat is forecast to rise by 5% and 6% respectively with poultry meat trade expected to increase by a more modest 2%.

Global production of meat is also forecast to increase in 2013 in response to rising demand in developing countries and easing back in production costs. In recent years high feed costs have been an issue for the pig and poultry sectors in particular being especially dependant on concentrated feed. However, feed prices have fallen back during the second half of 2012 and early 2013 which has made meat production more profitable again. The FAO forecasts indicate that global production of feed grains will increase during 2013/14 and so probably resulting in further downward pressure on prices.

As a result of all of these factors, long term global meat production growth is expected to continue with increases for all four major meat types forecast in 2013. Pig meat is expected to show a growth of nearly 2% the sharpest rise after poultry meat. Growth in pig meat production though is only expected in developing countries which account for two thirds of global output whereas a decline is expected in developed countries.

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