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AHDB Pig Market Weekly

05 December 2013

AHDB Pig Market Weekly - 5 December 2013AHDB Pig Market Weekly - 5 December 2013

Having declined during the first half of the year, global prices for pork have increased in recent months, based on export prices from major trading regions.


Export prices higher in the third quarter

From the low point in May at US$2.90 per kg, the average global export price reached US$3.05 in September. This was the highest monthly price since November 2011 and in the third quarter of this year prices remained above last year’s level. However, they were below the record levels recorded in 2011, although prices had almost converged by the latest month.

Pork export prices increased significantly in the third quarter of this year across all the four main exporting regions, the US, Brazil, Canada and the EU. Prices were highest for EU exports, with an increase of 3% compared with the same period in 2012, to $3.15 per kg. The tight supply situation in the EU combined with higher demand from Russia played an important role in maintaining the high prices. The US export price caught up to the EU level in July but prices have since stabilised at just over $3 per kg, again up by 3% on the year. Brazilian pork exports were the cheapest amongst the four main exporters, at $2.71 per kg, but have risen steadily since June and reached $2.92 in October. Canadian prices have increased from earlier this year but the three month average was 1% lower compared with July and September in 2012 in US dollar terms, partly due to the weaker Canadian dollar.

Pork returns to positive growth

Spending on pork increased 6% during the 12 weeks to 10 November, according to figures from Kantar Worldpanel. Growth has been driven by volume gains of 3%, a welcome reverse to the trend seen in recent months. All cuts except leg and belly contributed to the category performance. Chops and steaks returned to positive volume growth for the first time this year, boosted by shoppers buying them more frequently. Shoulder roasting joint purchases were up 4%, with a number of consumers switching in from beef roasting joints. Volume growth has been driven by younger consumers in particular. Marinades have continued their good performance with volumes up 5%, showing consumer appetite for value added products remains strong.

Spending on bacon fell during the period, due to a 6% drop in the amount purchased. Fewer shoppers have been buying bacon and the remaining shoppers have been doing so less often. Dutch and Danish products have driven the decline, while British bacon has shown volume and value gains again this period. Sausages continue to record expenditure gains driven by price rises, while volumes purchased were 6% behind last year. Premium sausage growth has now slowed, while low fat sausages are a small bright spot, with purchases up 23%. Spending on cooked ham has increased 3%, supported by volume gains of 1%, ahead of the growth seen for other cooked meats.

In the latest four weeks, the gains for pork continued, with purchases up 3% and spending up 6% as a result. Chops and steaks performed well, with trip volumes ahead of last year. The fall in purchases of bacon accelerated, leaving spending 4% below last year, while sausage expenditure increased 9% despite a volume reduction of 7%.

UK Pig price

The EU-spec DAPP edged up to 171.54p per kg for the week ended 30 November. This may indicate a seasonal upturn in pig prices in the run up to Christmas, a development which has been delayed this year. The latest price represented a week-on-week change of 0.19p and the annual difference widened slightly to just over 11p per kg. At a time of the year when throughputs are normally on an upward trend, the latest weekly estimated slaughtering came down to 162,700 head, around 10% lower than a year earlier. This indicates that the tight supply situation, which has helped to maintain firm pig prices, continues. Carcase weights for the week ended 30 November fell slightly to 79.84kg. This is likely a result of producers marketing their pigs early ahead of the Christmas period. At this weight, pigs were still nearly a kilo heavier compared with the same week in 2012.

In contrast to finished pigs, the price of an average 30kg weaner fell back from the week before to £56.39 per head. For the week ended 30 November, the weaner price was almost £11 higher than the same period in 2012. The weaner price would usually mirror finished pig prices but there is a lag between the two markets. The 7kg weaner market also followed the same trend, whereby prices fell marginally to £42.57 per head for the same week.

Spanish exports picking up in recent months

Spanish exports declined 7% on the year over the first nine months of 2013, although shipments were 8% up during the third quarter. The total value of exports remained virtually unchanged at €1.7 billion, as an increase in the average unit price offset the lower volume. The share of exports to non-EU markets increased marginally, especially those bound for China, as it restricted pork imports from some other sources while demand continued to grow. Export volumes to Russia reduced by 43%, virtually ceasing during the third quarter following Russian restrictions on sanitary grounds. Offal exports to China/Hong Kong are also important for Spain. Shipments to this region increased but total offal exports were hit by the Russian restrictions, as this was previously the second most important destination.

Pork exports to most EU destinations were down during the year to September, given lower production levels and consequent higher prices; Spanish pig prices have been among the highest in the EU for much of this year. From late spring, domestic demand for pig meat increased at the expense of other meats, also restricting export supplies. Italy received 20% more Spanish pig meat in the third quarter, suggesting an upturn in that market, although it still took 6% less overall in the year to September. Portuguese imports of Spanish pork increased, partly replacing imports of live slaughter pigs, which were well below historic levels, although above last year’s numbers. Exports to Germany declined as Spain lost market share to other suppliers.

Imports rebounded from 2012 levels as domestic production fell back but they remained low at 65,600 tonnes between January and September. Imports were almost entirely sourced from the EU.

Welsh pig numbers down

The latest figures released by the Welsh Government for June 2013 indicate a 13% year-on-year fall in the total pig herd, to 24,900 head. This is within the general range seen since 2005, so perhaps represents routine fluctuations within the herds of the few larger producers. Nonetheless, with high feed prices between this and the previous census, the decline could be partly attributed to high production costs. The number of slaughter pigs fell 14%, whereas breeding pig numbers remained relatively firm in the post-2005 context at 4,400 head. This could indicate a relative shift towards weaner production, with slaughter taking place elsewhere. Welsh slaughter figures over the first ten months of the year showed a 10% year-on-year fall in throughputs to 26,700 head. As with last year, fewer than 40 holdings accounted for almost two-thirds of pigs.

Feed market update

The UK feed wheat futures price for Jan-14 delivery decreased by 10p over the week and was worth £164.25/t as at Tuesday’s close. The Chicago maize futures price for Dec-13 delivery settled at $166.14/t, an increase on the previous week’s close ($164.76) but considerably lower than $251.87/t, the same time last year. Global grain prices have generally stayed calm in the last few weeks with only the occasional rise and fall in reaction to any news that could impact the supply and demand balance. However, no major threats have emerged to change the situation considerably. For wheat, the most recent driver has been supply concerns for the Argentine wheat crop. However, the latest Australian wheat crop estimate suggests increased export availability and thus a downward movement in prices, the extent of which could be limited by demand, notably from China.

According to figures from the EU Commission, the average EU pig feed price declined by 18% year on year in October and by 16% from July 2013, the beginning of the new season.

The protein market continues to receive confirmation of bigger soyabean supplies from South America, as a record Brazilian crop is projected by forecasters. The Chicago Dec-13 soyameal futures price settled at $491.74/t on 3 December, compared with $496.26 the previous week. In the UK, the Hi pro soyameal (Ex-store, East Coast) price for February delivery was £367/t as at 29 November, down by £1 on the previous week. The rapemeal price (Ex-mill Erith) was £215/t, for December delivery, a weekly increase of £12.

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

Quarterly Category Report published

The latest quarterly category report for pig meat is now out. The report analyses developments in the retail market for fresh pork, bacon, sausages and ham. As well as looking at the overall level of sales, the report looks at what is driving changes in volume sales and spending patterns. It also considers the performance of different retailers and looks at sales by cut and tier. Finally, the report includes a summary of the activity which took place during British Sausage Week at the start of November.

To download a copy of the latest category report, click here.

DOWNLOAD REPORT:- Download this report here

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