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AHDB Pig Market Weekly

24 April 2014

AHDB Pig Market Weekly - 24 April 2014AHDB Pig Market Weekly - 24 April 2014

According to the latest figures published by HMRC, UK pork imports in February strengthened by 6% on the year to 25,900 tonnes.


Contrasting trends in February UK exports and imports

The increase was largely a consequence of higher supplies from Germany, up 22% compared with the same month in 2013. In addition, increases were recorded from some smaller suppliers, including France and Spain. Higher imports in the latest month perhaps indicated that some UK buyers took advantage of the large gap between the EU and UK prices, particularly after the ASF cases in Poland and Lithuania. However, Denmark as the primary supplier reduced trade with the UK by 4% year on year. Less product was also imported from the Netherlands (down 9%) and Ireland (down 4%) than the previous year. Bacon imports were marginally down on a year earlier at 19,900 tonnes, although Danish and Dutch supplies were both up by 7%. Processed ham imports were higher by 6%, despite shipments from Ireland, the leading supplier, falling by 8%. Similarly, sausage imports were up 7% year on year.

The UK export market, on the other hand, weakened slightly in February, with shipments down 1% on the previous year at 14,000 tonnes, the first year on year decline since July 2012. This was largely a result of lower supplies to Asian countries, while the decline was somewhat offset by a 7% increase in exports to EU markets. The largest share was shipped to Germany, where trade fell by 2% on the year. Exports to other key EU markets also declined, including Ireland (down 2%) and Denmark (down 5%). However, these falls were more than offset by rises to smaller EU markets such as the Netherlands, Italy, Belgium and France. Outside the EU, UK pork exports to China and Hong Kong declined by 18% and 22% year on year respectively.

Offal exports in February more than halved, down to 2,600 tonnes, mainly due to lower shipments to EU markets, which have struggled for a number of months. From 3,800 tonnes last February, supplies to the continent fell to 900 tonnes, down 76% year on year. However, exports to China remained strong, being up 23%, and supplies to Hong Kong were at similar levels to 2013.

UK pig price

The EU spec DAPP for the week ended 19 April reached 163.71p per kg a small increase on the previous week. There has now been a small increase in finished pig prices for the third consecutive week helped by some signs of an uplift in demand given the favourable weather as of late. Despite the rise, the finished pig price last week was only 3p above the level of a year earlier whereas at the beginning of the year it was 9p. There was some reduction, to 161,000, in the estimated weekly throughputs from the week previous. However, 5,100 more pigs entered the abattoirs in the latest week compared with the same week in 2013. Average carcase weights for the week ended 19 April fell to 79.88kg down by 0.4kg compared with the previous week. This was the lowest weight recorded since the start of the New Year but it remained marginally up on the year previous.

The GB APP for the week ended 12 April was 165.07p per kg, a small rise on the week earlier. This was in line with the movement of the DAPP in the week before last. The latest APP was 1.79p above the EU spec DAPP for the same week.

The price of a 30kg weaner increased in the week ended 19 April, to £57.75 per head. This was more than £2 per head higher than the week previous. However, the recent price movements fail to show a consistent increase as would normally be expected during this time of the year. Nevertheless, the latest price was the highest of the year so far. This meant that the annual gap in the price widened to almost £9 per head. In contrast, the 7kg weaner market edged down by 0.43p, to £39.89 per head, during the same week.

EU exports down in February

EU pork exports fell by almost a fifth in February to 99,000 tonnes. This was a direct consequence of the Russian ban on EU pork after the outbreak of the ASF in Poland and Lithuania. Exports to Russia declined from 24,000 tonnes in February 2013 (20% of total exports), to 400 tonnes in the latest month. Shipments to Belarus and Ukraine were similarly affected. There was also a downturn in supplies to China, to which exports declined by 23% year on year, partly due to its ban on Polish pork. In contrast, other Asian markets performed well, with requirements from Japan and South Korea increasing by 18% and 49% respectively, for example. Slightly lower unit prices meant that the value of pork exports fell by 23% to €225.6 million.

Offal exports improved from the previous month but remained at a similar level to February 2013. The Russian ban inevitably left a similar impact on the EU offal market but strong demand from other key buyers held up trade. Amongst the key countries, there were increases from China (up 2%), Hong Kong (up 22%) and Philippines (up 79%). The value of offal exports in February amounted to €85.7 million, down 8% on the year, due to a similar decline in the unit price.

UK slaughterings marginally up in the first quarter

UK clean pig slaughterings in March totalled 778,000 head. This was 1% higher compared with the same month in 2013. Higher throughputs this year are partly a result of one extra working day, given the Good Friday Bank Holiday was at the end of March last year. There was a similar trend in England and Wales, whereby throughputs increased by almost 2% to 632,600 head. Pig slaughterings in Northern Ireland also rose by 2% on a year earlier, as a result of higher domestic supply. Scottish throughputs were down 8%, however.

Adult pig slaughterings in March totalled 19,800 head, almost 4% lower than the same month in 2013, continuing the recent decline. Clean pig carcase weights during the month averaged 81kg, up 2% on the same period in 2013 and only marginally lower than the record levels in January and February. Consequently, pig meat production increased by 3% year on year to 65,800 tonnes in March.

UK clean pig slaughterings in the first quarter of this year showed some stability, with only a marginal increase on a year earlier, to a fraction over 2.5 million head. However, higher carcase weights boosted pig meat production, which was up 2% to 212,200 tonnes.

Feed market update

May-14 UK feed wheat futures closed at £167.50/t on Tuesday (22 April), down £1.09/t from the previous week. November-14 UK feed wheat futures closed at £156.70/t (22 April) down £3.35 from the previous week. Markets followed a downward trend after the weekend as much needed rain was welcome in major growing areas of the US.

The May-14 Chicago maize futures contract closed at $195.37/t on Tuesday (22 April), down from $198.33/t the previous week. For the UK between January and February 2014 data from HMRC showed a drop of 45% in UK maize imports and if this slowdown continues there might be less of a carry-over into the new season than some are currently expecting.

Almost all Ukrainian spring wheat, barley and oat crops are now in the ground, with 100%, 96% and 97% respectively of intended area planted as of 18 April. Dry conditions continue to have a significant impact on US crops. Winter wheat conditions are very similar to last year, with 33% of the crop rated poor or very poor. In the case of maize, farmers had planted an estimated 6% of the US maize area by 20 April compared with an average of 14% over the past 5 years.

UK (Hi pro, ex-store, East coast) soyameal prices were down by £4.20 this week (22 April). The May-14 Chicago soyabean futures contract closed at $543.66/t, on Tuesday (22 April), down $7.90/t from last week’s price. The tightness of US soyabean stocks is highlighted by the importation of Brazilian soyabeans.

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

USDA makes PEDV reportable

Last week, the US Department of Agriculture announced that they are making Porcine Epidemic Diarrhoea virus (PEDv) and Swine Delta Coronavirus (SDCv) reportable. Until now, reporting was voluntary. Nevertheless, the number of positive cases of PEDv had reached 5,790 by 12 April, with 29 states affected. Although the numbers of new cases reported has slowed slightly from the peak of over 300 per week, they remain substantial. In addition, 50 SDCv cases had been reported in 10 states.

The market impact of the diseases continues to be severe. Although hog prices appear to have stabilised, they are around 50% higher than they were at the start of the year and well above previous record highs. As a result, retail pork prices are also at record highs, although increases haven’t been as dramatic. Hog slaughterings in recent weeks have been down by 5% or more on year earlier levels, although record weights are offsetting this to some extent. However, most forecasts suggest that the shortfall in throughputs will increase further as the year progresses.

As well as the US, cases of the new strain of PEDv have been reported from Canada, Mexico, Colombia, Peru, the Dominican Republic, China, South Korea, Taiwan and Japan. To date the impact in most of these countries has been less dramatic than in the US.

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