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AHDB Pig Market Weekly

12 September 2013

AHDB Pig Market Weekly - 12 September 2013AHDB Pig Market Weekly - 12 September 2013


Fewer shoppers buying into pig meat categories

Retail expenditure on pork dipped 1% compared to last year in the 12 weeks to 18 August, despite price rises of 7%, according to the latest figures from Kantar Worldpanel. This was caused by an 8% drop in the amount purchased, which is likely to be partly due to the hot weather that meant consumers have been looking for lighter dishes. Roasting joints showed the largest declines, particularly shoulder and loin joints. Pork chops and steaks have also struggled, with the amount purchased 5% below last year. Meanwhile, marinades (such as ribs) continue to record volume and spending gains, providing an extra £8 million to the market.

The hot weather has not boosted sausage purchases, which fell 4%. Despite this, large increases in average price have resulted in spending growth of 12%. Premium sausages continue to outperform the market, with a number of consumers switching from standard tiers. Bacon sales also suffered this quarter, with volume decline, resulting in a fall in spending on all cuts. In recent weeks, consumers have been switching away from bacon to burgers and grills, driven by the hot weather. Sliced and cooked ham is the bright spot of the market, with volume purchases increasing by 6% and spending up by 7%.

In the latest 4 weeks, trends have been broadly similar across most categories, with total spending on pork down 3% and the amount purchased 10% behind last year. However, leg joint purchases were up by 27%, driven by promotions at the top three retailers.

More good quality straw set to reach the market

With a much larger than usual spring barley area being harvested, the availability of good quality straw is likely to be higher than normal. This means that more arable farmers face the choice of baling, providing a potentially useful income stream, or chopping the straw and incorporating the nutrients back into the soil. Any additional gross margin from selling straw may help them to offset some of the decline seen in cereals prices recently. Straw prices have risen over the last decade, although prices pre-harvest were lower than they were a year earlier, particularly for wheat straw.

Analysis by HGCA shows that the value of straw has increased beyond the value of the nutrients required to replenish soils. This means that growers are more likely to consider baling if they wish to supplement crop gross margins, although there will be farm-specific factors to consider. If the larger spring barley area results in more straw being baled and offered to the market, it would likely put downward pressure on prices and reduce the returns to arable farmers. However, straw, especially spring barley straw, can play a useful role in some cattle feed rations and demand from this sector may help support prices to some extent.

Further information about the straw market and the factors influencing decisions about baling or chopping can be found in the latest edition of HGCA’s Prospects.

UK pig prices

For the week ended 7 September, the EU-spec DAPP reached a new record high of 169.35p per kg, up by over a penny on the previous week. Inflated prices across the continent have influenced producer prices on the UK market. Consumer demand is also likely to have been higher following the end of the holiday period. At the latest quote, finished pig prices were 18p above 2012’s level for the same week. The weekly estimated slaughterings totalled 165,100 head, higher than the previous week, which was shortened due to the bank holiday. Compared with the same week last year, throughputs were marginally higher. Carcase weights for the same week reached 79.65p per kg, over a kilo higher than the same week in 2012.

The 30kg weaner price edged up to £54.08 per head for the week ending 14 September. This was up 38p on the week and was the highest price since June 2010. Producers received £15 per head more compared with the same week last year. Weaner prices largely follow the finished pig market and the recent increase in DAPP could have partly contributed.
The GB average cull sow price is currently not available. However, reports suggest that prices continued to strengthen in week ended 31 August as export demand remained robust. With continental supplies said to be more plentiful in the first week in September, the upward trend in cull sow prices is reported to have reversed to some extent.

Producer share of retail price lower in August

The average farmgate pig price in August came down slightly to 167.9p per kg. At the same time retail prices increased. As a result, the producer share of the retail price fell to 42%, down one point from the previous month. However, producers still received 2% more of the average retail price than in the same period in 2012. Bacon prices for the whole of August are not yet published but the producer share in July stood at 38%. This was 2% higher than in the same month last year.

Compared with July, retail prices for the latest month recorded a 7% increase for fillet end leg and a 5% rise for diced pork. Boneless leg and minced pork also increased by a small amount, while fillet of pork and loin chops and steaks recorded a 1% month on month decline. However, the annual comparison showed that prices were generally higher across most cuts, with the exception of pork fillet (down 1%). The largest annual price rise came from diced pork (up 9%), followed by boneless leg (up 6%). On average, prices in August 2013 had increased by 4% compared with a year earlier.

Physical performance improves further

The physical performance of the best GB pig breeders reached new levels in the year to June 2013, according to data provided to BPEX by Agrosoft. The top third of breeders weaned over 26 pigs per sow per year for the first time, while the top 10% achieved 28 pigs per sow. However, the average performance across all herds was little changed over the last year at 22.85 pigs per sow. Nevertheless, this does mark a modest improvement compared with the previous quarter due to a combination of slightly larger litters, more litters per sow and a lower mortality rate. The quarter on quarter productivity increase was larger among outdoor herds, up by 0.38 to 21.70 pigs per sow, than indoor ones, up 0.10 to 24.20 pigs per sow.

In the latest quarter, there were also further improvements in the performance of rearing and finishing herds, notably in feed efficiency. The feed conversion ratio for rearing herds improved from 1.80 in the year to March to 1.75 in the year to June. In finishing herds, the equivalent figure moved from 2.87 to 2.81 over the same period.

A full range of performance indicators for indoor and outdoor breeding, rearing and finishing herds can be accessed through the BPEX website by clicking here. As well as providing average figures, the website includes the performance of the best third and best 10% of producers.

Feed market update

The UK feed wheat Nov-13 futures price settled at £154.50/t on Tuesday 10 September, down £3.40 on a week earlier. The Chicago Dec-13 maize futures price also closed lower over the week on 10 September at $184.65/t, down $2.46 but a daily recovery from the previous day’s close of $182.48/t. Global grain markets have generally moved on updated weather forecasts for the US. Otherwise, there has been limited news and traders currently await the USDA report to be published on Thursday.

The Dec-13 Chicago soyameal futures price closed lower over the week at $468.70/t on 10 September, down from $483.80 the previous week. Recently, there has been volatility in the US soyabean prices and thus the meal price on the back of US weather forecasts. Some dryness was seen in key producing states which stressed the soyabean crop, which is in the sensitive pod-filling stage and this has been reflected in the latest crop condition report. In the UK, the Hi pro soyameal (Ex-store, East Coast) price for September delivery was £405/t, as at 6 September.
To read more about the latest developments in the feed market, click here.

Pork drives increasing global meat prices

The FAO Meat Price Index averaged 175.0 points in August, an increase of 2.2 points (1.3%). The rise mainly reflected stronger prices for pig meat, which were up by 4.5%, as those of other types of meat changed little. An important element sustaining pig meat prices was the strengthening of the euro relative to the US dollar. The Meat Price Index is now 4.5 points higher than in August 2012, although still 4.2 points lower than in early 2013.

In contrast, the FAO Food Price Index averaged 201.8 points in August 2013, nearly 4 points (1.9%) below its July value and 11 points (5.1%) less than in August 2012. The Food Price Index has fallen back near to levels seen in June 2012. It has been driven down by continued falls in the international prices of cereals and oils on the back of a recovery in supplies

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