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AHDB Pig Market Weekly

30 January 2014

AHDB Pig Market Weekly - 30 January 2014AHDB Pig Market Weekly - 30 January 2014

Pork was the only red meat to show volume growth in the 12 weeks to 5 January, according to Kantar Worldpanel.


Promotions boost pork’s performance

Purchases of pork increased by 2%, while beef and lamb both declined. Spending on pork was also up 2%, with prices suppressed by an increase in the amount sold on promotion. Loin and shoulder joints showed good growth, with both supported by well-advertised promotions at major retailers. Chops and steaks also made gains in spending and volume purchases; this was also driven by promotions. Pork mince continued to grow impressively, now accounting for 4% of the pork market. Purchases were up by nearly a third year-on-year, with this category again supported by more promotions (particularly Y for £X deals).

Spending on sausages increased 8% over the latest 12 weeks, while volume sales were 4% below last year. Premium and low fat sausages outperformed other types. Meanwhile, spending on bacon fell 2%, due to a fall in purchases. Smaller retailers and the discounters benefited from consumers switching away from the top five retailers, where bacon performance was, in most cases, behind the total market. Pre-packed ham continued to show steady growth, boosted by shoppers buying slightly larger volumes per trip.

In the latest 4 weeks, covering the key Christmas period, pork’s growth slowed but remained positive, unlike other red meats which saw purchases fall. Spending on pork declined due to deeper promotional discounts. Expenditure on bacon grew, while the decline in volume sales eased somewhat. There has been a turnaround for sausages, with volume figures showing year-on-year growth for the first time since the summer. Ham figures continued to look encouraging, with volume purchases up 5%. Further analysis of Christmas trading will feature in next month’s Pig Market Trends, out on 25 February.

Sow stall ban update

New EU pig welfare regulations, including the partial ban on the use of sow stalls, entered into force on 1 January 2013. Over a year on, the EU Commission has announced that it has issued reasoned opinions to four member states which don’t appear to have fully enforced the new regulations. The four countries include two which are significant suppliers of pork to the UK: France and Belgium. Between them they supplied 17% of UK pork imports in January-November 2013. The other two countries involved are Cyprus and Greece. Should these countries fail to comply within two months, the Commission may decide to refer them to the Court of Justice of the European Union.

The Commission has also sent letters of formal notice to two other Member States – Slovenia and Finland - for failure to fully enforce the rule on sow stalls. The next step for these countries, should they fail to comply within two months, would be a reasoned opinion. Reports suggest that five other Member States, as yet unnamed, are still being assessed. These are likely to be the five other countries sent a formal letter of notice last February: Denmark, Germany, Ireland, Poland and Portugal.

UK pig prices

Against the normal seasonal trend, the EU-spec DAPP rose by 0.60p to 167.89p/kg for week ended 25 January. However, with the confirmation that Karro have withdrawn from the sample, following the departure of Cranswick Country Foods last week, it is likely that some of the recent movements are driven by changes in the sample rather than underlying market developments. With prices falling a year ago, the gap between this year’s level and last year’s widened to over 9p/kg. At 80.41kg, carcase weights averaged half a kilo lower than in the previous week but were still well above their level a year before.

Once again, there were contrasting movements in weaner prices, with both the 7kg and 30kg averages moving in the opposite direction to the previous week. Overall, the market remains strong but broadly stable, with supplies remaining relatively tight and demand robust. The average 30kg price for week ended 25 January was up 67p at £56.38 per head, while the 7kg average fell just over £1.50 to stand at £41.85. At the current level, 30kg weaners are still fetching around £10 more than in the equivalent week last year.

EU takes greater share of Chinese imports

Chinese pork imports grew for the fourth straight year in 2013, as shipments rose by 12% to total 583,000 tonnes. The country is now taking more than four times more pork from the international market than in 2009. Chinese meat consumption has grown steadily and pork has benefitted from this, despite losing market share to other species. A series of food scandals have meant affluent consumers have an increasing preference for imported product, which is seen as safer. Despite remaining the leading supplier, the US has been hit by restrictions related to the use of Ractopamine, which is banned in China. Its shipments were down by more than a third on 2012 and were less than half those in 2011.

Although Canada has gained from the drop in US supplies, the main beneficiaries have been EU exporters. The EU’s market share has risen from little over a third in 2011 to just over half in 2012 and as much as 63% in 2013. All major EU exporters benefitted to some extent. For the first time, the UK had market access for the full year and supplied a total of 21,300 tonnes to China, giving it a near 4% share of imports. With prices slightly lower on the year, the value of Chinese pork imports was up 10% to ¥6.79 billion (£705 million).

By the final quarter of 2013, US shipments of pork to China were back above year earlier levels, albeit compared with a low level in 2012. EU shipments were again higher, although growth was slower than earlier in the year, partly due to a fall in volumes from Germany, the leading EU supplier. The UK supplied a record 6,600 tonnes to China during the quarter, with its market share topping 4% for the first time.

EU weaner prices continue to recover

EU weaner prices have continued to recover from a sharp fall in May 2013, when prices tumbled to the lowest point of the year at around €45 per head. A strengthening finished pig market combined with lower feed costs encouraged demand for weaners during July and August, a time of year when prices are normally falling. Since then, the finished pig market has weakened but weaner prices have remained relatively robust. In the final quarter of 2013, the EU weaner price averaged €47.14 which was slightly down on the same period last year but prices were back on an upward trend at the end of the year. Prices reached €49.38 a head in the last week of 2013, up 3% on the same week last year. Weaner prices typically increase in the final quarter of the year in anticipation of rising finished pig prices in the spring, with tight numbers and lower year on year feed costs in 2013 further supporting prices.

Weaner prices followed differing trends across Member States during the final quarter of 2013. Of the major markets, prices in the Netherlands and Spain performed strongly, up around €8 and €9 per head respectively. Prices in Germany and Belgium also edged upwards during this period. In contrast, Danish and Polish prices bucked the trend falling by around €5 and €3 respectively during the quarter. This could reflect some weakening of demand from Polish finishers, who are also key buyers of Danish weaners.

Feed market update

After falling to the lowest levels since May 2012 on 20 January, May-14 wheat futures have had a mini bounce in the last week. The market closed at £154.30/t on Tuesday, a weekly increase of £1.75. Good economic news for the UK and the subsequent strengthening of sterling has added downward pressure to grain prices. Although there is early confidence in the Northern Hemisphere 2014 crops, recent cold weather in the US is causing some concern but the full impact won’t be known until spring. A record Chinese maize crop means its appetite for imported maize is expected to be weak this year. At home, the UK cereals supply and demand estimates were updated yesterday and can be found by clicking here.

The world is becoming increasingly confident toward South American soyabean crops, a key price driver at present. However, US supplies are tight so Chicago May-14 futures have lacked any real direction over the last month. For Brazil, the USDA’s attaché has raised its crop estimate on good yields from early maturing varieties. However a replay of last year’s logistical issues is likely, which may restrict the flow of Brazilian crop to the global market. In Argentina, rains over the weekend will have helped in preserving yield potential. In the UK, Hi-pro soyameal (East coast) fell back to £362/t – on a par with values in mid-November and the lowest level since April.

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

Korean imports down in 2013

With domestic production having fully recovered from the major Foot & Mouth Disease outbreak in late 2010, South Korean pork imports fell by nearly a quarter in 2013. Volumes during the year were close to their level in 2009 and 2010, before the disease outbreak. The fall in shipments came despite an 8% drop in the average import price. High domestic production led to falling prices on the domestic market, which imports had to compete with. As a result, the value of imports was nearly 30% down on 2012 at ?900 billion (£526 million).

All significant suppliers shipped lower volumes of pork to Korea in 2013. The US slightly increased its market share, despite a 16% fall in volumes. EU shipments were down slightly more than average, with its market share falling from 41% to 39% as a result. In common with other suppliers, imports from the UK were down, by 23% to 1,800 tonnes.

January Pig Market Trends out now

The January edition of Pig Market Trends (PMT) was published on Tuesday. As well as the usual summary of developments in the UK and EU pig markets and the global feed market over the last month, this month’s issue includes more detailed articles on:

  • Prices by weight and back fat. The prices paid for pigs vary for many different reasons but much of the variation is because of differences between the pigs themselves. Understanding these differences can help producers to maximise returns. This article analyses the variation of prices by carcase weight and back fat levels.

  • Trends in international trade. Since 1990, the amount of pork traded between different countries has more than trebled. There have also been significant changes in the main importing and exporting nations. This article examines these changes.

  • US pork market. After a difficult year in 2012, with high feed costs and lower pig prices, 2013 was better in some respects. However, various challenges meant that it turned out not to be as good a year as many had hoped. This article looks at developments in the US market over the year and prospects for 2014.

  • GB cull sow prices. AHDB/BPEX has temporarily stopped publishing GB cull sow prices but historical trends show that the GB and German sow prices are closely related. This article examines developments in the German sow price since August.

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