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AHDB Pig Market Weekly

23 January 2014

AHDB Pig Market Weekly - 23 January 2014AHDB Pig Market Weekly - 23 January 2014

For the second consecutive month, UK clean pig slaughterings were below year earlier levels in December.


Pig supplies remain tight in December

Throughputs during the month totalled 758,300 head, 1% lower than in December 2012. All parts of the UK recorded similar trends, with the English kill down by 1% and Scottish and Northern Irish numbers both down by 2%. That meant that UK slaughterings for the year as a whole reached 10.05 million head, just 12,000 more than in 2012. This stability in throughputs came despite the fall in the breeding herd last year, indicating a further rise in productivity. The number of pigs slaughtered per sow averaged 23.0 in 2013, up from 22.3 in 2012.

Adult sow and boar throughputs in December were down 7% on the year at 15,900 head. This meant that cullings for the year as a whole were 5% down, with a total of 252,000 head. As has been the case all year, clean pig carcase weights were much heavier than last year, with the average of 79.2kg being 1.5kg more than the previous December. That meant that, despite the lower slaughterings, pig meat production was marginally up on the year at 62,500 tonnes. Total production for the whole of 2013 was 832,900 tonnes, 1% more than in 2012.

Strong UK pork exports continue

The UK’s strong pork export performance continued in November, with volumes up 8% compared with a year before. Shipments to China reached a record 3,300 tonnes, more than 40% up on the year, making it the largest market during the month for the first time since April. However, this was offset by a fall in exports to Hong Kong, with overall shipments to the region little changed. Volumes sent to other EU Member States, which made up over 60% of the total, were up 9% year on year. Exports of cured and processed pig meat were also higher than last year but offal shipments were only about half their level in November 2012. This was due to a collapse in EU sales, with shipments to Greater China and other non-EU markets higher.

In contrast, pork imports were 9% down on the year. As has been the case for much of the year, tight supplies in Denmark led to a 22% fall in shipments, although it remained the leading supplier. This was partly offset by a rise in imports from Germany, where pigs were more plentiful. Denmark and Germany both shipped more bacon/ham to the UK in November, leading to a 5% rise in overall shipments. The other major supplier, the Netherlands, did send less bacon to the UK. Processed pig meat imports were lower, however, with a particularly sharp fall for sausages.

UK pig prices

For week ended 18 January, the EU-spec DAPP fell 1.70p to stand at 167.29p/kg. Falling prices are normal at this time of year and the current price remains over 7p above its level in the same week last year. Subdued consumer demand post-Christmas and low EU prices are suppressing quotes, despite pig supplies remaining relatively tight. This week, Cranswick Country Foods has notified BPEX that they will no longer be participating in the voluntary DAPP sample from either of their abattoirs in Preston and Watton. As a result of the reduced sample, no estimate of weekly slaughterings is yet available but supplies appear to have remained lower than at the same point last year. During the week, carcase weights were little changed at just under 81kg, close to the record levels of two weeks before and 0.8kg higher than a year earlier.

The broad stability in the weaner market continued during week ended 18 January. An increase in the number of animals available led to a decrease of just over a pound in the average 30kg price to stand at £55.71 per head. This was still over £9 more than a year earlier. In contrast, the average price for a 7kg weaner was up by more than £1 to £43.41 per head, reversing the losses recorded since Christmas.

Key markets for EU pork remain strong

November was another good month for EU pork exporters, with shipments up by 9% year on year, to 151,700 tonnes. This was only slightly lower than the figure for October, which was the highest monthly total for over two years. The top five markets for EU pork all took increased volumes compared with a year earlier. Russian demand was still strong, given the continuing ban on US pork and restrictions on a number of other suppliers. Japan also performed well, with shipments 29% up on November 2012, while other key Far Eastern markets also recorded double digit growth. Belarus, Ukraine and Australia were among the few markets which took less EU pork this November.

The slowdown in offal exports continued in November, with shipments down 8% on the year, although at 98,800 tonnes volumes reached their highest point in 2013. As in most recent months, both China/Hong Kong and Russia, the two main markets, took less EU offal, partly offset by rises to smaller markets, notably the Philippines.

Stable production costs continue

Latest provisional estimates from AHDB/BPEX show that the cost of GB pig production was again little changed in January. The average cost for the month is estimated at 146.3p/kg. Although this is around 2p lower than the estimate for December, this can largely be attributed to the heavier carcase weights in January. Although wheat prices have eased somewhat in recent weeks, this hasn’t yet fed through into compound feed prices, meaning that underlying costs have been little changed since September.

The current situation is in marked contrast to a year earlier, when production costs reached a record high of 173p/kg. In that month, the DAPP averaged just over 159p/kg, around 10p below its level in early January this year. With both prices having moved in favour of pig producers, a loss of £11 per pig has been transformed into a positive margin of around £18 per head. Nevertheless, the high costs last year emphasise that the profitability of the sector remains vulnerable to any future shocks in global cereals or oilseeds markets.

Feed market update

Generally, global grain markets continue to drift lower with the Northern Hemisphere crops more or less confirmed and no major concerns for the Southern Hemisphere crops yet. The May-14 UK feed wheat futures price settled at the lowest level since May 2012 on Tuesday at £152.55/t, after some volatility returned to grain prices. The Chicago maize futures price also experienced a weekly decline, on the back of ample supplies. There has been continued news of China rejecting DDGS from the US due to the presence of an unapproved GM variety and this has resulted in lower maize prices. Furthermore, the weather forecast remains good for the Argentine maize crop.

The Chicago soyameal futures price (May-14) settled at $445/t on Tuesday, a 3% decrease on the previous week and the lowest level since November 2013. The Hi-Pro soyameal (Ex-store East Coast) price for February delivery was £373/t as at 17 January, a 2% weekly increase. Global soyabean prices have remained firm on the back of strong demand, despite good supplies, but the market fell this week following reports of an improved Argentine soyabean crop outlook and the expectation that demand will soon shift to South America.

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

Brazilian pork exports down in 2013

Brazilian pork exports continued to weaken in the last quarter of 2013 to end up 12% down for the full year, compared with 2012. The majority of this decline was the result of a halving of shipments to Ukraine due to lower demand, exacerbated by the import ban on Brazilian pork which affected trade during the spring. Despite this fall, 2013 pork exports to Ukraine were still up on 2011 levels. Of the smaller markets, volumes to Argentina also halved, to 10,000 tonnes. In contrast, Brazilian exports to Russia in 2013 were up 6% on the previous year. Continued strength in shipments to this market in the last quarter of the year resulted in the overall volume for 2013 also surpassing 2011 levels, although it was still well below the levels seen in earlier years.

Shipments to Hong Kong, the second largest market for Brazilian pork, were down 1% on 2012. Exports to the majority of other markets increased, with growth in volumes to Angola, Singapore, Uruguay and Georgia, among others. Despite the overall fall in Brazilian pork exports in 2013 their value was up marginally on 2012 at R$2.66 billion. This was helped by the weakening of the real against competitor currencies, particularly in the first nine months of the year.

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