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AHDB Pig Market Weekly

15 August 2013

AHDB Pig Market Weekly - 15 August 2013AHDB Pig Market Weekly - 15 August 2013

According to latest figures from Eurostat, EU pig slaughterings in May were over 2% down on the same month last year.


EU pig supplies tighten further in May

Throughputs totalled 20.4 million head, nearly half a million fewer than a year earlier. This meant that the number of pigs killed across the EU in the first five months of the year was down by 1% at 102.9 million head. With carcase weights slightly higher, pig meat production across the year to date was only marginally down on a year earlier at 9.28 million tonnes. However, production in May was nearly 2% lower year on year.

Despite the overall downward movement in May, there were contrasting trends in different member states. Some which had seen sharp falls earlier in the year continued in the same vein, with Polish throughputs 14% lower than last May, for example. Elsewhere, large falls were recorded in Spain and the Netherlands (both down 8%). For the latter, this might be partly due to increased exports of live pigs leaving fewer for slaughter domestically. In contrast, throughputs were somewhat higher on the year in Germany, Belgium and Italy, among others. However, the sharpest rise was in Denmark, where the May kill was up 11%. Even this was not large enough to fully offset falls earlier in the year so Danish slaughterings for the year to date were still down by 3%.

Producer share of retail price higher again

The DAPP averaged 168.6p per kg in July, an increase of nearly 2p on June’s figure. The average pork retail price also experienced a monthly increase of 2p. Consequently, producers’ share of the overall retail price was only slightly higher than last month’s level (and the highest since the mid-1990s) at 43%. Despite this, pork producers' share remains well below that received by beef (59%) and lamb (56%) producers during the month. For bacon, price data is only available up until June, when the producer share of the retail price increased to 38%, up 1 percentage point on the share in May.

In July, most cuts experienced a small monthly increase in average retail price but fillet end leg, boneless shoulder and diced pork all saw price declines. The largest monthly decrease was for fillet end leg (-6%) while pork fillet increased by the largest proportion of 2%. Compared with a year earlier, prices for all cuts had increased, by 4% on average. The biggest price increase was for boneless shoulder (7%), with traditional sausages and diced pork up by a similar proportion. The slightest increase, of 1%, was experienced by minced pork.

UK pig price

The EU-spec DAPP has been fairly stable in recent weeks and for the week ended 10 August, the average weekly price for finished pigs fell to 168.05p per kg. This was a week on week change of 0.29p per kg, following the typical trend during the holiday season. The annual difference has narrowed recently but is still well over 17p per kg. Throughputs during the week totalled 155,600 head, down 5% on the year. However, the difference was partly due to disruption at one plant and the shortfall may be recovered in the coming weeks. Carcase weights for the week were again little changed at 78.85p per kg. This was almost a kilo higher compared with the same week a year earlier but there is still no sign of the normal seasonal increase in weights.

For the week ending 17 August, weaner prices dipped marginally from the previous week, to £53.58 per head. Since finished pig prices have eased from the peak last month, producers are somewhat reluctant to pay more, despite further falls in feed prices. Nevertheless, in the latest week, producers received £14 per head more compared with the same week in 2012.

Sow prices continued to strengthen and for the week ended 3 August, prices reached 116.04p per kg. This was over a penny higher than the week before and 10p per kg above the level a year earlier. GB cull sow prices closely follow the German prices which have also risen along with those in other key member states. The number of sows culled during the week totalled, 4,600 head, almost 1,000 head fewer than a year earlier.

Compound pig feed production down

According to latest figures from Defra, production of compound pig feed in the second quarter of 2013 was 1% lower than in the same period last year. At 405,000 tonnes, production was at its lowest level since the final quarter of 2011. Breeding pig feed output was lower for the second successive quarter, falling by 7% year on year. Production of finisher feed was also down on a year earlier but quantities of grower and starter/creep feed were still higher than last year. The fall in production is likely to have been the result of the smaller breeding herd recorded in the December census, with a knock-on effect on numbers of finishing pigs.

In contrast, production of other types of compound animal feed was significantly higher than last year, with total output up 12%. Despite this overall increase, the amount of wheat used by compounders was slightly lower than a year earlier, given the higher price premium over other crops. The shortfall was made up by significant increases in the use of barley (up 44%), oats (up 56%) and maize (up 177%). Similarly, use of soya meal was down 7%, with increased use of other protein sources, including rape meal.

Stable Danish pig herd

Latest figures published by Statistics Denmark show that pig numbers in July 2013 totalled 12.3 million head. This was 1% lower than the same quarter in 2012 but 2% higher compared with the previous quarter of this year. Overall breeding pig numbers were almost unchanged from a year earlier at 1.24 million head. In-pig gilts and maiden gilts increased by 2% and 1% respectively, perhaps suggesting some renewed optimism, but the increment in these categories was offset by a 1% fall in the number of in-pig-sows.

Despite a stable breeding herd, the number of piglets was up 1%, which indicated a small increase in productivity. However, continuation of weaner exports meant that the number of finishing pigs declined by 4% on the year. Given the modest increase in maiden gilts and the new EU regulations which came into effect earlier this year, the stability is likely to continue in the immediate future. Future trends in Danish production will, therefore, depend on the level of weaner exports, with some signs that they have begun to slow in recent months.

US and Canada exports affected by lower Asian demand

Pork exports from the US between January and June were down by 13% on a year earlier, with a total of 728,600 tonnes. Shipments were affected by restrictions imposed by a number of countries over the use of the feed additive Ractopamine. Over half of exports were destined for Asian markets, but lower shipments left a significant impact on the overall export trade position of the US. Japan (down 5%), China (down 42%) and South Korea (down 31%) imported less and Hong Kong (up 11%) was the only major market that increased purchases. Shipments to Mexico, the second largest market, were also down slightly. On the other hand, US pork imports increased by 7%. As the dominant supplier, Canada was the main contributor to the uplift, while Danish shipments were down by just over a fifth. The combination of lower exports, higher imports and firm prices indicates stronger consumer demand on the US domestic market.

Pork leaving the Canadian border also recorded a marginal decline as volumes totalled 442,700 tonnes in the first six months of this year. As well as higher demand from the US, Chinese purchases increased by more than three-quarters during the period. However, these uplifts were offset by large declines from markets including Japan, which recorded a 14% drop, and South Korea. In addition, exports to Russia were significantly down on the back of the restrictions placed on meat imports from the Canadian market.

Feed market update

The Nov-13 UK feed wheat futures price closed at the lowest level since June 2012 at £154.50/t, on Tuesday and was nearly five pounds lower on the week as the price had declined for nine consecutive trading days since the end of July. The Chicago maize price also closed down 3% on the week at $176.08/t on Tuesday. Global grain prices continue to experience a downward trend on expectations of a production recovery in various countries, supported by the latest USDA supply and demand forecasts.

The latest trade data show that the UK imported 2.96Mt of wheat for the 2012/13 season, the biggest amount of wheat imported since 1978. A significant amount of maize was also imported by the UK in 2012/13, as full season imports reached 1.69Mt, the highest level since 1992. The compound feed industry has been the main user of this additional supply of grain into the UK.

The Hi-pro, any origin soyameal price (ex-store East coast) as at Friday was £404/t for August delivery, down £13 on the week, while the rape meal price (ex-mill Erith) decreased by £13 from the previous week to £173/t. Protein meal prices have also seen a downtrend on expected increases in their respective crops’ availability this season

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

Falling pork imports in Asian markets

The trend from the previous quarter continued as Hong Kong pork imports declined by 16% in the first half of 2013. There were few suppliers which recorded increases, including China (up 4%) and the Netherlands, which shipped 29% more compared with the same period in 2012. However, there were significant declines from other key suppliers. Germany, in particular, lost over half of its Hong Kong sales, as did the UK. Pig offal imports also came down, by just over a fifth, a continuation of the trend of recent years.

The South Korean market was also weaker during the same period as pork imports were down 28% compared with the January to June period last year. The Korean pig industry is now fully recovered from the major FMD outbreak in 2010 and, with production expanding rapidly, its requirement for imports is reduced. All of the main suppliers were affected, with shipments from the EU back by as much as 43%.

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