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AHDB Pig Market Weekly

10 October 2013

AHDB Pig Market Weekly - 10 October 2013AHDB Pig Market Weekly - 10 October 2013

The amount of pork sold in Great Britain was 9% lower than a year earlier in the 12 weeks to 15 September, according to figures from Kantar Worldpanel. As a result, spending fell 1% behind last year, despite average price rises of 8%.


Consumer spending on pork falls despite higher prices

Although most of the decline was due to fewer shoppers buying pork, a notable reduction in the average amount bought per trip suggests that pack sizes are decreasing as retailers aim to meet price points. Roasting joints recorded the largest drop, while sales of pork chops/steaks were also behind last year. Purchases of belly cuts dipped but price rises kept expenditure positive. Although smaller in volumes, other cuts such as mince and marinades remain the bright spots for pork, posting volume and value gains.

Bacon has struggled, with the purchases 9% behind last year and spending falling 4%. Fewer shoppers have been buying bacon and remaining shoppers are buying less often. Chops, steaks, joints and rashers all recorded volume declines but premium rashers continued to make gains. Meanwhile, spending on sausages was up 14%, driven by price increases, with volumes 3% below last year. Consumers are continuing to trade from standard sausages to premium, contributing to the higher prices being paid. Sliced cooked ham showed encouraging growth, helped by the warmer weather, with volume purchases up 5% and spending up 7%.

In the last 4 weeks, volume sales of pork fell 6% year on year, although spending was slightly ahead of last year. Pork loin joints returned to growth, driven by strong performance at two major retailers. Spending on bacon was 2% behind last year, caused by a decline of 8% in the amount purchased, while spending on sausages continues to increase due to rises in the prices paid.

Large fall in Scottish pig numbers

According to the latest figures published by the Scottish Government, the pig population in June totalled 319,400 head. This was 12% lower compared with the same time last year. This was largely a result of a 13% decline in the numbers of pigs for fattening, partly due to more pigs being moved to England for finishing following the closure of the largest Scottish abattoir last autumn.

At the same time, the total breeding herd declined 11% to 35,200 head. Sows in-pig fell by 12% but pregnant gilts increased by 13% and maiden gilts by 5%, which indicates that Scottish farmers may be looking to increase production in the near future. However, whether this prevents further falls in the herd will depend on producer confidence, which is currently improving due to the developments in both the pig and feed markets.

Scottish pig numbers have fallen steadily over the last ten years with the exception of 2009 and 2010. The pig market in Scotland was strong during this period, allowing total pig numbers to increase on the back of strong prices. However, in most recent years, farmers have experienced some struggles, due to low pig prices or high feed costs.

UK pig prices

The EU-Spec DAPP continued to increase in the week ended 5 October. At 171.49p per kg, the finished pig price was 0.78p per kg higher than the week before. Historical trends indicate that pig prices normally ease at this time of the year. However, increased demand for UK pig meat from retailers continues to lead to strong prices. The year-on-year change in the latest week was 16p per kg. According to the AHDB weekly estimates, slaughterings reached 180,200 head for the same week. This was 11,900 head higher compared with the same period in 2012. The average carcase weight for the week ended 5 October was almost unchanged at 80.1kg, a kilo higher than the previous year’s level.

For the first time in seven weeks, the weaner price eased down to £54.42 for the week ending 12 October. This was a week-on-week change of 16p per head and the annual difference also narrowed slightly. Nevertheless, in the latest week, breeders received almost £14 more than a year before. This year, weaner prices have remained firm between late summer and early autumn, a time when the market would typically dip.

We are currently trialling a new reporting methodology for calculating 30kg weaner prices. In addition, 7kg weaner prices are now being collected for the first time. To see data on the new basis, click here. To view details of the new methodology, click here.

EU weaner prices firm during the summer

Weaner prices in the EU have recovered since the sharp fall in May, when prices tumbled to the lowest point of this year at around €45 per head. In the period between July and early September, weaner prices increased by over €2. In the third quarter, the price per weaner averaged €47 per head. This meant that breeders received €3 per head more compared with the same period in 2012. A strengthening finished pig market combined with lower feed costs encouraged the demand for weaners at a time of year when prices are normally falling. After a few weeks of stability, there was a modest fall in weaner prices at the end of September, on the back some easing in the EU finished pig market. However, prices remained above last year’s level, at €47.51 per head for the week ended 29 September.

Weaner prices followed a similar pattern in the majority of EU countries, although some recorded an easing of prices in recent weeks. After the sharp rise since August, prices in Denmark have remained firm and stabilised at almost €51 per head. This indicates that robust export demand from Poland and Germany continues. In particular, the decline in the German breeding herd meant that the EU’s largest producer turned to live imports to partly compensate for the anticipated supply shortage. Prices in southern Europe have been somewhat more stable, with those at the end of September similar to three months earlier.

Feed market update

The UK feed wheat Nov-13 futures price closed 4% lower on the week on Tuesday at £161.10/t, the highest price since 27 August. The Chicago Dec-13 maize futures price settled at $173.92/t, a slight increase on the previous week, while the Chicago Dec-13 wheat futures price closed 2% higher on the week at $254.79/t. Global wheat prices have increased recently on strong export demand, quality issues in Canada and damaged crops in Argentina. There have also been concerns that supplies from the Black Sea region for 2014 could be disrupted, which could lead to increased demand for US wheat, depleting stocks. Although the Chicago maize Dec-13 closing price showed a slight increase on the week, it is still on the low side as it reached its lowest nearby price since September 2010 on 1 October, at $173/t.

The Dec-13 Chicago soyameal futures price closed at $457.35/t on Tuesday (8 October), up by $12.79 (3%) on a week before but a decline from the previous day’s close of $463.74/t. In the UK, the Hi pro soyameal (Ex-store, East Coast) price for October delivery was £394/t as at 4 October, an increase of £12 on the previous week. The rapemeal (Ex-mill Erith) price for October delivery rose by £8 over the week to £194/t, as at 4 October.

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

Small increase in UK pig holdings

The latest UK farm holdings data from DEFRA indicate that in 2012 there was a slight rise in the total number of pigs and pig holdings in the UK compared with 2011, although both were still below 2005 levels. In June 2012, there were 11,100 commercial farm holdings with pigs. However, around half of these had fewer than 10 pigs. Excluding them, there was an average of 786 pigs per holding, a slight rise over the two previous years, although still lower than in 2005. Over 80% of pigs were on the 1,360 holdings with over 1,000 head.

There was also a small increase in the number of holdings with breeding pigs. However, this was due to more of the smallest holdings - those with fewer than five sows. Taking into account only operations with five or more breeding females, the average herd size was stable at just over 150 sows. Nearly 90% of breeding pigs were on the 900 holdings with 100 or more sows. These had an average herd size of around 440 sows.

Global food prices falling but meat more expensive

The FAO Food Price Index averaged 199.1 in September, 2.3 points (1%) below its August value. It is down 11 points (5.4%) since the beginning of the year, having dropped for the fifth month in a row. This was driven by a sharp fall in the international prices of cereals, with most other prices increasing slightly. The Cereal Price Index was down 12.9 points (6%) from August and 65 points (25%) from September 2012. The decline follows a drop in the previous two months, due to favourable supply outlook, particularly for maize and rice.

The FAO Meat Price Index averaged 175.7 points in September, an increase of 1.5 points (0.9%) from August. The rise mainly reflects stronger prices for poultry, which were up by 3%, as prices for bovine and ovine meats were only slightly up and those for pig meat remained unchanged. Rising poultry prices reflect strong demand, with currency movements also playing a part. In the case of bovine meat, rising demand from Asia contributed to the lifting of prices.

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