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AHDB Pig Market Weekly

06 February 2014

AHDB Pig Market Weekly - 6 February 2014AHDB Pig Market Weekly - 6 February 2014

Two cases of African Swine Fever (ASF) have recently been confirmed in wild boar in Lithuania, close to the border with Belarus, the first confirmed case of ASF in the EU mainland.


African Swine Fever in Lithuania

Lithuania has a relatively small pig herd, around 800,000 head as at December 2012, and is only a modest exporter of pig meat, shipping 12,000 tonnes of pork and 10,500 tonnes of processed product between January and October 2013. It also exported 277,000 live pigs during the same period, mainly slaughter pigs sent to Poland. However, the market impact of the outbreak may be much more significant than the scale of the Lithuanian pig industry might suggest.

In response to the outbreak, Russia has blocked shipments of pigs and pork from anywhere in the EU. While this may be only a temporary measure, if restrictions remain in place it could a big impact on the EU market, given that Russia is the leading destination for EU pork exports. It took over 360,000 tonnes of EU pork in 2013 and was also a key market for offal and fats. If this amount of pork had to find a market within the EU, it could lead to a significant fall in pig prices. Although the UK doesn’t have access to the Russian market (other than for breeding pigs), this would be likely to have a knock-on effect on prices here. Discussions aimed at resolving the situation are continuing between the EU Commission and Russian authorities.

Another concern is that the cases in Lithuania are not too far from the Polish border. If ASF were to spread into Poland, the impact could be much greater. Poland is one of the EU’s top 5 producing countries and a significant exporter of pig meat (358,000 tonnes of pork and over 100,000 tonnes of processed product in January-October 2013). Over 30 countries, including the UK, took 1,000 tonnes or more of pork from Poland in the first 10 months of last year. It is the second largest supplier of processed pig meat to the UK.

To read more about African Swine Fever and measures to prevent it spreading to the UK, click here.

Lower Russian pork imports in 2013

At 592,100 tonnes, Russian pork imports were down by 18% in 2013. This was largely a result of reduced demand because of higher domestic production and lower shipments from North America due to restrictions over the use of Ractopamine. Canadian and US shipments fell by 56% and 93% respectively in 2013 compared with the previous year. Imports from Brazil increased by 2% but this mainly reflected a strong first quarter of the year. This situation reversed in the remainder of the year when supplies from Brazil were down markedly. Nonetheless, Brazil regained its usual position as the leading pork supplier to Russia, accounting for just over a fifth of total pork imports. The value of imports totalled RUB 65.5 billion, down 13% on the year before.

The shortage of supplies from Brazil and North America created opportunities for EU exporters. Russian imports from the EU made up over 60% of its pork imports and supplies increased by a quarter in 2013. The main beneficiary was Denmark, with a 46% increase in supplies compared to 2012. The Netherlands and Poland also gained importance. However, Spain and Germany, two of the three largest EU suppliers, were both affected by Russian restrictions on their shipments, meaning they were lower than in 2012. The trade situation with the EU may change given the discovery of ASF in Lithuania (see above). There are also reports that Russia is close to approving US arrangements for certifying pork which is Ractopamine-free, allowing it to resume shipments, possibly as early as next month.

UK pig prices

The EU-spec DAPP resumed its decline in the week ended 1 February at 165.90p per kg. This was a week-on-week change of 2p per kg. The downward trend is typical for this time of the year as pig prices traditionally dip post-Christmas as a result of some easing in consumer demand. The low EU price and Russia’s blocking of EU pork shipments will also have contributed. This week’s price was 6p down from the peak in October but 8p higher compared with the same week in 2013. Carcase weights for the same week edged up to average 80.57kg. Weights remain well above their level in the same week in 2013, as has been the case since this time last year.

The price of a 30kg weaner fell to £55.36 per head for the week ended 1 February. This was £1 down on a week earlier. Since the start of the year, the 30kg weaner price has somewhat stabilised around £56 per head, although with some week-on-week fluctuations. The latest price showed an annual increase of almost £9 per head. The price of a 7kg weaner reached £42.06 per head for the week ended 1 February. This was only marginally higher compared with the week before, indicating that this market is also broadly stable.

Pig farm business incomes improve

According to latest forecasts from Defra, the average farm business income for specialist pig farms in 2013/14 is set to be nearly double the level of the year before. The provisional estimate for the current year is that incomes will average £78,000, compared with £41,000 last year. Most livestock farms are expected to have higher incomes this year, with dairy farm incomes also nearly doubling. In contrast, most arable farm incomes are set to fall, with cereals farms down by more than a quarter.

The improvement in farm business income for pig farms is mainly the result of higher finished pig prices, which have been up by an average of 9%. Improved productivity and rising weaner prices have also contributed. For the year as a whole, input costs are forecast to be little changed, despite the falls in cereals prices post-harvest. This is due to higher prices in the early part of the year and firm soya prices throughout the year. It is worth noting that, based on past experience, these early forecasts may be subject to significant revisions when the final results are published later in the year.

EU sow prices down from the summer peak

The EU sow price, particularly the German price, is of great importance to the UK since it provides a good indication of the probable trends in GB cull sow prices, given that average GB prices are not currently being published. The German M1 sow price has fallen back since the rise in summer 2013, driven by the finished pig market. With the normal seasonal closures of processors adding to the downward pressure over Christmas, the sterling value of the German price was down to 114.68p/kg for the week ended 26 January 2014. While this was almost 20p lower than the peak in September, the latest M1 sow price remained 11p per kg above the same week last year.

Similar trends are evident across the continent, with the price for Danish and Dutch sows having fallen from the strong levels recorded in September last year. Since the start of the year, sow prices in Denmark have fluctuated around 80p/kg. However, the Danish sow market showed some signs of recovery in the most recent week, ended 2 February, as prices rose to 86.10p/kg. Sow prices in the Netherlands were generally a little higher than in Denmark but the level was similar in the latest week at 86.63p/kg. This was about 2p down compared with the same period in 2013.

Feed market update

UK feed wheat futures for May-14 have rallied in recent days, bouncing from the low of almost £151/t set on 31 January, with prices around £154.50 on Wednesday morning. New crop prices (Nov-14) have seen the same trend, bouncing off the low of £142/t and now hovering around £145. The price trends of recent days have been a global affair with both US maize and Paris wheat futures tending higher since late January. In the US, monthly crop condition data from the top wheat state, Kansas, helped support the market, with 20% of the wheat crop rated as poor or very poor against just 6% a month earlier.

US soyabean futures have also rallied in recent days; values have increased from $461 to $477/t. Following the rise in global prices, UK soyameal values have also picked up, with Hi-pro (ex-store, East Coast) reported at £367/t on 31 January – up £5 on a week earlier. Following growing confidence for the Brazilian soyabean crop, a period of dry weather has now commenced, creating some concern, although the crop is still expected to be a record.

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

Japanese imports ease back

A small increase in domestic production and a modest decline in pork consumption meant that Japan’s pork imports eased slightly in 2013. The depreciation of the yen also made Japan a less attractive market for exporters, given that the import price is fixed in yen terms. The country imported 5% less pork in 2013 compared with the year before at 738,500 tonnes. The US remained their primary supplies but volumes from there were down by 10%. Similar trends were recorded for the other key suppliers including Canada and Denmark, which shipped 18% and 3% less than 2012. Together the three countries accounted for 72% of total imports.

In contrast, imports from the EU as a whole increased by 4% on a year earlier, with Spanish shipments up by 29% and Dutch volumes almost doubling. Pork imports from Mexico also recorded an increase of 30%. Amongst other pig meat categories, processed products were popular on the Japanese market, as imports increased by 6% on the year to 199,000 tonnes. The US was the dominant supplier.

New product gives access to key meat data

Earlier this week, AHDB Market Intelligence published a new set of data tables covering different aspects of the UK and global meat industry. MeatStats consists of 13 tables, nine covering the UK and four the global market. Apart from two summaries of the latest figures, each table provides annual time series data back to at least 2000 and, in most cases, as far as 1990. Some tables also provide quarterly data for the last two years. As well as pork, MeatStats tables also cover beef, lamb and poultry meat.

Between them, the tables cover areas including:

  • Slaughterings and production
  • International trade
  • Consumption
  • Retail purchases and prices
  • Abattoirs
  • Livestock numbers
  • Seasonality

The initial release of MeatStats includes data up to 2012 (and for the first three quarters of 2013, where appropriate). The tables will be updated next month to include data for the whole of 2013. Thereafter, tables will be updated once a quarter.

The MeatStats tables, either individually or as a complete set, can be downloaded by clicking here.

DOWNLOAD REPORT:- Download this report here

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