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AHDB Pork UK Pig Meat Market Update

09 September 2013

BPEX UK Pig Meat Market Update - 5 September 2013BPEX UK Pig Meat Market Update - 5 September 2013

British Pig Executive Monthly UK Pig Meat Market Update

German exports rise further

German pork exports increased by 3% between January and June this year compared with a year earlier a similar rise to that recorded in the first half of 2012. Higher shipments in the first half of 2013 were mainly the result of increased availability on the domestic market, as production was up by 1% during the same period, and some fall in domestic demand. The main beneficiaries included Italy and the Netherlands as shipments to both countries increased by 10%. The UK has now become the fifth largest market for German pork and shipments were up 9% on the year. These increases were partly offset by a 7% decline in exports to Poland. Russia reduced its purchases by 18% with tighter veterinary controls and competition from other EU suppliers impacting on German trade. The unit export price was up 3% year on year and so the value of exports increased by 6% to €1.9 billion.

German imports on the other hand came down by 5% in the first half of the year compared with the same period in 2012. While shipments from Belgium were up 2%, other key suppliers recorded marked downturns with the exception of the United Kingdom for which there was no change. As a result of the sharply higher feed costs of the last year and the change in EU pig welfare regulations supplies in the EU have been tighter in 2013. Imports from Denmark and the Netherlands came down by 5% and 10% respectively. Supplies from Spain were as much as 24% below 2012 levels. The average import price was unchanged but lower volumes meant that the value of German pork imports totalled €851.3 million, was down 5% on the year.

UK Pig price

The EU-spec DAPP increased marginally for the week ended 31 August, to 167.95p per kg. Normally, finished pig prices would ease during this time of the year but increasing prices on the continent are helping to support the UK market. The annual difference increased to 18p per kg for the latest week. During the same week, estimated weekly slaughterings totalled 156,400 head down 7,000 head on the previous week partly given the short week. This was 2% or 3,400 head down compared with the same week last year given the tightening supply situation. Carcase weights edged up again to 79.47kg and while the seasonal increase has been delayed it has become more apparent as of late. Compared with the same week last year weights averaged 1.6kg more. Non-availability of data does not allow the publishing of a sow price for week ending 24 August.

The weaner market also edged up for the week ending 10 September, to £53.70 per head. This was a week -on-week change of 4p. Despite some easing in the feed prices the ongoing sluggish finished pig market meant that producers were somewhat reluctant to pay more for weaners. However, producers received almost £15 more compared with the same week last year.

Small fall in sow numbers in Northern Ireland

The June pig census figures published by the Department of Agriculture and Rural Development, indicate a 2% increase in total numbers in Northern Ireland to 433, 900 head. The increment was the result of a 2% rise in the number of other pigs which includes those for fattening and young pigs. However, female breeding herd numbers were down 1% on a year earlier suggesting a slight improvement in productivity. The 5% reduction in both maiden gilt and in-pig gilt numbers suggests a lack of producer confidence and that a further decline in the breeding herd can be expected.

Export price trends vary globally

Since producer prices are quoted on a different basis in different countries, calculating an average global pig price is virtually impossible. However, a good indication of overall trends can be obtained by comparing export prices for fresh and frozen pork. Based on figures from the four leading global exporters, the EU, US, Brazil and Canada, prices during the first half of 2013 were similar to those in the same period of 2012. Having started the year at around US$3.00 per kg, the average price eased slightly in the second quarter to just over $2.90. Prices remained below the record levels recorded in 2011. The weakness of the Japanese yen and Korean won contributed to this, with shipments to those two countries priced much lower in dollar terms.

However, the stable average price hides some differing trends for the individual exporters. Having converged in 2010 and 2011, prices diverged again last year, with EU exports priced significantly higher than those from the Americas. Having started the year more expensive than a year earlier, EU exports have come down in price and been below year earlier levels since March. US prices have followed a similar trend, albeit at a lower level. Canadian pork, on the other hand, has been consistently cheaper than last year, down an average of 13 (US) cents per kg. Brazilian prices have generally been higher than in the first half of 2012, although the closure of the Ukrainian market in May and June led to a sharp fall, taking prices close to their level a year earlier.

Feed market update

The Nov-13 London feed wheat futures price closed at £157.90/t on Tuesday (3 September), down by £3.30/t on a week ago. Prices resumed their downward trend, giving up about half of the previous week’s gains as weather models showed improved conditions in the US.

The Hi-pro any origin soyameal (ex-store East coast) price as at Friday (30 August) was £417/t for early September delivery, up £30/t on the week and the rape meal price (ex-mill Erith) increased £5/t from the previous week to £187/t.

The rise in nearby protein meal prices is due to tight near-by stocks, with the increase in November futures also being reflected in spot positions. The domestic market was expected to be pressured by dried distillers grain and solubles (DDGS) from ethanol plants by now, although they are yet near capacity and so output of DDGS is very limited. 

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

Spanish export trade well down

Spanish pork exports in the first half of 2013 were down by 13% or 68,000 tonnes compared with the same period in 2012. This was due to a 2% decline in domestic production, lower demand from French processors and steady domestic demand. In Spain the high rate of unemployment and pressures on consumer spending associated with the economic situation has seen consumers switching to lower value cuts and meats. Both fresh pork and processed pig meat consumption has held up at the expense of other red meats.

Exports to France and Italy were down by 7% and 15% respectively. Shipments to Germany were down by one third as Spain lost market share to other EU suppliers. Of the other key markets for Spain only Portugal recorded a significant increase with shipments up 14%. Amongst the non-EU markets, Spain was hit by restrictions from Russia which meant that supplies to this country were down by 24% year on year in contrast to little change with China. The total value of exports between January and June amounted to €1 billion, down 6% on the year despite an 8% rise in the average export price.

Spain is mainly an exporter of pig meat and imports only amounted to 44,600 tonnes which were up 22% on a year earlier with increases for the three largest suppliers.

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