AHDB Pig Market Weekly
23 March 2012
AHDB UK Market Survey - 23 March 2012
Since 2009, consumers have been increasingly buying
groceries that are promoted in order to reduce and
manage their expenditure according to Kantar
Worldpanel.
Changes in consumer shopping habits
Since 2009, consumers have been increasingly buying groceries that are promoted in order to reduce and manage their expenditure according to Kantar Worldpanel. Throughout 2010 and the first half of 2011, consumers were attracted to volume based promotions such as ‘two for £5’ or ‘buy one, get one free’. This sustained high volume of sales in the grocery market which resulted in expenditure increasing. In autumn 2011 the trend appeared to change, with consumers concerned about food waste and final checkout expenditure rather than volume based promotions. Consumers have increasingly purchased single items at full price.
This more recent behaviour trend has translated into the red meat retail market and had an impact on volume purchases in the latest three months. The number of red meat retail price promotions declined in the last quarter compared to the previous year. This resulted in volume purchases declining, especially on the more expensive cuts such as roasting joints, where many shoppers look for price reduction promotional activity. However, expenditure on red meat did increase as the fewer price reduction promotions, compared to last year, resulted in an increase in the average retail price on red meat products.
Sales of convenience items, including pizza and frozen
chicken breasts have been the main benefactors of
reduced red meat purchases. Frozen chicken breasts have
appealed to consumer’s desire not to waste food, and
have also benefitted from an increase in price promotional activity. As well as convenience
motivations, pizzas and ready meals have also
experienced increased price promotional activity
in recent months. This has appealed to the new
wave of shopper behaviour and has been the
major driver behind their purchase gain from red
meat.
Consumers have also changed other behaviours
and appear to have adopted a ‘little and often
approach’ when shopping. Recent IGD shopper
track data, highlighted that consumers have been
shopping for groceries more often, with those
saying they shop three or more times a week
rising from 39 per cent in December 2009 to 49
per cent in December 2011. An increasing
number of consumers reported that they have also
conducted their main shopping trip less often.
Shoppers appear to have become more
disciplined in planning their grocery shop with
two thirds of consumers indicating that they
planned the majority of their purchases before they enter the retailer; up from around half in
2008.
Price sensitivity remains the key driver of shopper
behaviour and is likely to remain so during 2012.
Consumer confidence, a prerequisite of consumer
spending, remains at a historical low and
combined with wage freezes, increased
unemployment levels and rising utility bills it is
likely that consumers will continue to adapt their
shopping behaviour on order to maximise their
household budgets.
Cattle market trends
Prices
As supplies remained tight, in week ended 17
March 2011 the prime deadweight cattle price
averaged 338.9 p per kg, an increase of a penny
compared to the previous week. The average
price of R4L steers and R3 young bulls both
increased a penny to 347.0p and 333.8p per kg
respectively, while R4L heifers were at a similar
price to the week earlier at 344.7p per kg. The
-O4L cow price eased for the first time this year,
down marginally to average 274.9p per kg.
In week ended 21 March prime cattle prices at
GB auction markets also strengthened. Reports
suggest that firm demand for quality cattle is
being maintained with premium steers and
heifers reaching up to 220p per kg. There was
an increase of a penny in the average price of
heifers, up to 193.3p per kg, and a three pence
increase in the young bull price to average
182.6p per kg. This was tempered by a levelling
in the average steer price at 188.7p per kg.
Trade
Exports of fresh and frozen beef in January 2012
totalled 8,300 tonnes. Largely as a result of an
11 per cent decline in production this was 20 per
cent lower than in January 2011, however it still
represented the second highest volume in
January following the resumption of exports in
2006. There was a decline in shipments to all of
the UK’s major trading partners with shipments
down almost a quarter to other Member States.
While fresh and chilled beef accounted for the
majority of UK beef exports, shipments of frozen
product increased on the year. Shipments to the
new destinations of French Polynesia and Ghana
were largely responsible for this. Despite the fall
in volume, the export trade was worth a similar
amount to that in January 2011, £28 million, as
the average unit price increased over 20 per cent
on the year.
Imports of fresh and frozen beef into the UK
during January totalled 17,300 tonnes, eight per
cent lower than in the same month last year.
Shipments from Ireland declined four per cent to
12,000 tonnes, but still accounted for almost two
thirds of the UK’s import requirements.
Following the trend in 2011, imports from non-
EU destinations declined and were less than half
what they were in January 2010. The most
notable decrease in imports were from Australia
and Uruguay, both down around a quarter
compared with January 2011. UK importers paid
nine per cent more for beef on average in
January 2012 and as a result the cost of beef
imports totalled £65 million, the same as in
January last year.
Sheep market trends
Prices
Deadweight lamb prices appear to have begun to
react to the increased prices on offer at livestock
markets. In week ended 17 March the SQQ
increased by over three pence to average 444.1p
per kg. This represents the largest week on week
increase recorded so far this year. However this
was not enough to keep prices above year earlier
levels; this latest figure is the first time in 2012 that
prices have been below 2011 levels.
Liveweight prices continued their upwards
trajectory in week ended 21 March. At 213.6p per
kg the SQQ was over six pence higher on the week.
However there was only a three pence increase
recorded on Wednesday 21 compared with nine
pence increases on Thursday 15 and Monday 19
March; indicating the rate of increase has slowed as
the week progressed. Demand was apparent across
all weight bands, heavy lambs increased in price by
over seven pence to average 194.5p per kg while
lambs weighing over 52 kg averaged 173.8p per kg,
also seven pence up on the week. Better prices
appear to be encouraging more lambs forward with
throughputs at GB auction markets increasing by
nine per cent compared with the previous seven
days.
Trade
Imports of sheep meat into the UK during January
were down almost a third on year earlier levels,
further indicating the weak consumer demand for
lamb. Imports of New Zealand sheep meat were
down 26 per cent, despite some of their production
difficulties being alleviated. Figures from New
Zealand indicate that during January they shipped
only three per cent less product to all markets, with
China, France, Germany, the United States and
Saudi Arabia all taking increased volumes.
There was a decline of almost two thirds in volumes
from Australia, with shipments from Spain, France
and the Netherlands also lower. Ireland was the
only market to record significant growth with
volumes up by almost half, likely helped by a 13
per cent increase in production.
With a five per cent decline in production limiting
availability, exports of sheep meat fell five per cent
on the year in January 2012. Shipments to France
declined six per cent, while to Ireland they were
down by quarter as a result of increased availability
on this market. Volumes to Germany and Belgium
increased two and 11 per cent respectively. There
was some growth in shipments to non-EU
destination with shipments to Vietnam increasing 72
per cent on the year, and also to Hong Kong and
Ghana doubling.
Pig market trends
Prices
In week ended 17 March, tightening supplies
resulted in the DAPP strengthening again, rising
by just under a penny on the week to 141.52p per
kg. There was a marginal decrease in the average
weight of pigs in the sample to 79.27 kg, whilst
the average P2 probe measurement was
unchanged at 10.9mm. At this level the DAPP
was almost six pence dearer than at this time last
year.
The recovery in the finished pig price has led to
some upward movement in the weaner market,
despite relatively high feed prices. The average
price for a 30kg weaner increased by 40 pence to
£45.92 per head in week ending 24 March.
Trade
In January 2012, the amount of fresh and frozen
pork imported into the UK was at its lowest level
for nearly two years at 25,200 tonnes, 13 per cent
lower than in January 2011. The decline would
have been even sharper but for 15 per cent
increases in shipments from both Germany and
Spain. A fall of six per cent was recorded in
volume from Denmark, while shipments from
most other major suppliers declined even further.
Reflecting the trend in recent months, imports of
fresh boneless cuts increased by seven per cent,
although with frozen shipments lower, overall
boneless volumes were three per cent down year
on year.
Bacon imports in January were also at a lower
level; at 19,800 tonnes, they fell below 20,000
tonnes for the first time since August 2009.
Again, an increase in shipments from Germany, in
this case of 20 per cent, partly offset lower
quantities from other suppliers. In contrast to
pork and bacon, imports of sausages and other
processed pig meat products increased.
Processed imports were more than 50 per cent
higher than a year earlier, with a major increase
in shipments from Ireland and Denmark.
Exports of fresh and frozen pork from the UK in
January 2012 were two per cent above year
earlier levels at 10,200 tonnes. Amongst
significant markets, the only one to take less UK
pork was the Netherlands. There was strong
growth in many smaller markets, including
Belgium, South Korea, Sweden, Singapore, Spain
and South Africa. Frozen shipments were
particularly strong, 17 per cent higher than a year
earlier. In contrast, fresh and chilled exports were
four per cent lower. There was also modest
growth in exports of bacon, while offal exports
were more than 50 per cent higher than a year
earlier at 2,500 tonnes.
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