AHDB Pig Market Weekly
18 April 2012
AHDB UK Market Survey - 13 April 2012
Grain markets continued to display volatility in the first quarter of 2012 with UK May 2012 wheat futures showing a range of £151 to £177 per tonne.
Grain market update
The top-end of these values were recorded in late March and continued into early April, primarily fuelled by dry weather concerns in South America.
The 2011/12 marketing season has been characterised by an abundance of wheat, but tight supplies of maize, the world’s main feed grain. Wheat is an alternative feed grain to maize so prices need to broadly follow those of maize to avoid too much demand. On 30 March, the USDA released quarterly grain stock estimates. Stocks of maize in the US as at 1 March were 152.6 million tonnes, 13 million tonnes below the same point last year and the lowest level since 2004. This data reminded the global feed grain market of the delicate availability in the sector.
In Europe, and despite the return of Russian supplies, exports have been sufficient to keep domestic supply and demand finely balanced. This is complemented by the situation in the UK where wheat exports in the seven months to January totalled 1.8 million tonnes, with the total season surplus at 2.6 million tonnes.
As is normal for this time of year, markets are shifting the focus to developing crops in the dominant northern hemisphere. UK November 2012 feed wheat futures are in the region of £155 per tonne, a noticeable discount to spot prices.
Similarly to the old crop, maize remains a principle driver, especially in the US. On 30 March, the USDA released its annual prospective plantings report. In response to strong forward prices, US farmers are expected to increase maize plantings by four per cent to 38.8 million hectares. If realised, this would be the highest area since the mid-1930’s. One of the warmest March’s on record has enabled US farmers to start maize planting early with seven per cent planted by 8 April, compared with three percent a year ago. This gives an early suggestion that US plantings could reach the forecast.
Closer to home, the Northern European dry weather concerns have been quenched by rain in early April. In some regions of the UK, there was more rainfall in the first ten days of April than in the entirety of the winter.
Cattle market trends
Prices
In week ended 7 April, as the Easter weekend
approached and retailers favoured increased lamb
promotions, the deadweight cattle trade levelled on
the week. At 338.7p per kg the prime cattle average
price was the same as in the week earlier. Despite
this, the price of R4L steers edged even closer
towards the 350p per kg threshold, up marginally to
346.7p per kg. The price of R4L heifers was
unchanged on the week at 345.2p per kg, but still
represented an uplift of two per cent since the turn
of the year. The cow market is reportedly finely
balanced at the moment with any changes in
European demand quickly affecting manufactures
requirements. In the latest week the price of -04L
cull cows declined two pence on the week to
276.4p per kg.
In week ended 11 April March the liveweight prime
cattle trade at GB auction markets eased on the
week. Steers and heifers were both back a penny to
189.7p and 192.2p per kg respectively. The average
price for cows at auction increased marginally on
the week to 133.1p per kg.
Consumption
According to the latest Kantar Worldpanel data in
the 12-week period ending 18 March 2012,
household purchases of fresh and frozen beef
declined four per cent on the year to 71,900 tonnes.
Expenditure increased seven per cent to £494
million, as increased retail prices more than offset
the lower household purchases. The decline in the
volume of beef purchased was largely as a result of
the reduced number of price promotions.
Household purchases of most beef cuts were lower
than in the corresponding 12-week period last year.
Roasting joints and frying/grilling cuts were the
worst performing, with purchases down 12 and 10
per cent respectively, as consumers continued to
trade down to cheaper protein alternatives.
However, in the 52-week period, household
purchases of fresh and frozen beef were marginally
higher on the year at 305,000 tonnes. Expenditure
increased five per cent to £1.95 billion as a result of
a similar increase in the average retail price. Sales
of second quality stewing beef were seven per cent
up on the year while household purchases of mince
were at a similar level to the year earlier.
Sheep market trends
Prices
Deadweight old season lamb prices eased in week
ended 7 April, the SQQ fell by almost five pence to
average 466.4p per kg. This follows an increase of
almost 13 pence in the previous week. The earlier
Easter and better conditions has resulted in new
season lambs coming to market in increasing
numbers earlier than last year. In the latest week, the
new season lamb SQQ increased by over 19 pence to
average 520.8p per kg; this represents a significantly
higher premium than at the start of the 2011 new
season lamb marketing period when prices were
between 10 and 20p per kg ahead of their old season
equivalent.
As processors attempted to restock after Easter the
liveweight lamb trade at GB auction markets
strengthened in week ended 11 April. This follows
the seasonal pattern of prices increasing after the
holiday weekend as numbers are generally tighter.
The OSL SQQ increased nine pence on the week to
217.4p per kg. The trade for new season lambs is
continuing apace, and in the latest week the SQQ
was up four pence to average 262.3p per kg. This
restocking effort was likely aided by the colder
weather in the run up to Easter which may have aided
lamb consumption to some degree. Additional
promotional activity on lamb for the Easter
celebration is expected to have helped boost
domestic sales.
Cull ewe prices are currently at unprecedented levels
and are showing little sign of easing off. In the latest
week the average price increased £5 to reach £92 per
head.
Consumption
According to Kantar Worldpanel, in the latest 12-week
period ending 18 March 2012, household purchases of
fresh and frozen lamb totalled 14,700 tonnes, 10 per
cent lower than in the corresponding period a year ago.
Reduced purchases of shoulder roasting joints and
frying/grilling cuts drove the decline in volume, down
22 and 17 per cent respectively. In contrast, as a result
of increased promotional activity, sales of leg roasting
joints increased eight per cent on the year. The number
of households that bought lamb was lower as was the
amount purchased on each shopping trip. However, as
a result of a nine per cent increase in the average retail
price, expenditure in the 12 week period declined to a
lesser extent, by just over two per cent, to £132 million.
In the four week period ending 18 March total lamb
purchases were only one per cent back on the year.
Sales of leg roasting joints and stewing lamb increased
22 and six per cent respectively, likely to be as a result
of the increased promotional activity and cooler
weather conditions.
Pig market trends
Prices
The recent upward trend in finished pig prices continued
in week ended 7 April, with the DAPP increasing by
over a penny to average 144.19p per kg. This latest price
increase was despite some plants operating for only four
days due to the Easter break, leading to throughputs
declining six per cent compared with the previous week.
At this price the DAPP was over five pence higher than
in the corresponding week a year earlier. The seasonal
decline in average carcase weights continued, dropping
to 78.61kg, with the average probe measurement slightly
higher at 10.7 mm.
The weaner market remains balanced, with the average
price changing by no more than a few pence per head
over the last month. In week ended 14 April the average
price of a 30Kg weaner was £45.92 per head, a penny
lower than in the previous week. High feed costs
continue to limit the number of places available with
finishers, despite the rise in finished pig prices.
Sow Stall Ban
This afternoon, BPEX is publishing a new report assessing the market impact of the new pig welfare regulations which come into force on 1 January 2013. The regulations include a partial ban on the use of sow stalls, already completely outlawed in the UK. As well as reviewing progress towards implementation and approaches to enforcement of the new rules, the report also sets out three scenarios for the future development of the EU pig meat market. The report draws on the experience of similar regulations in the laying hen sector, suggesting significant market disruption is likely. Reduced supplies are likely, as significant numbers of producers across Europe quit the industry, leading to price increases and, in more extreme scenarios, product shortages. The full report will be available on the BPEX website.
Consumption
According to Kantar Worldpanel in the 12-weeks to 18
March 2012, expenditure on fresh and frozen pork
increased by five per cent to £220 million, but the amount
purchased fell by four per cent to 72,400 tonnes. Reduced
promotional activity resulted in a nine per cent increase in
the average price paid by consumers. Reduced purchases
were mainly driven by a significant decline in sales of leg
roasting joints, down over a quarter year on year, a result of
the fewer retail promotions and poor sales in the week
between Christmas and New Year. In contrast, more belly
and loin roasting joints were purchased, up 20 and 12 per
cent respectively.
In the 52-week period household purchases of pork totalled
188,000 tonnes, one per cent more than in the corresponding
period the year earlier. The number of households purchasing
pork remained at a similar level and as a result of a four per
cent increase in the average retail price, expenditure increased
six per cent to £925 million. This modest growth in pork sales
comes at a time when beef and lamb purchases have been
under pressure and have lost volume.
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