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AHDB Pig Market Weekly

02 June 2014

AHDB Pig Market Weekly - 29 May 2014AHDB Pig Market Weekly - 29 May 2014

Latest figures published by Defra recorded a 1% decline in UK clean pig slaughterings in April, to 937,200 head. Fewer working days in April, due to the later Easter Bank Holidays this year, are likely to have affected the kill numbers.


UK slaughterings down but production up

Although slaughterings in England remained almost the same as last April at 761,400 head, Scottish throughputs were down by 9% year on year. However, Scotland kills only around 3% of the total and hence has a limited impact on the overall figures. The decline was, therefore, mainly driven by a 4% fall in Northern Ireland slaughterings. This brings the slaughtering figures for the first four months of the year to 3.4 million head, similar to the same period last year, indicating stable supplies.

UK adult pig slaughterings in April totalled 24,100 head, around 3% down on the same month in 2013, a similar rate of decline to the year to date. Reportedly lower sow prices and a younger herd are likely the main factors. The average clean pig carcase weight in April fell to 80.5kg, the lowest monthly figure since the turn of the year but the highest April figure on record. The seasonal fall in weights has been less apparent this year. As a result, total pig meat production in April increased to 79,000 tonnes. This was 1% higher than the same month in 2013. Given the higher carcase weights throughout the year, pig meat production in the first four months of this year totalled 291,000 tonnes, up almost 2% on the same period last year.

Market impact of PEDv spreading

Latest figures from the US show that the number of new cases of Porcine Epidemic Diarrhoea virus (PEDv) confirmed has begun to slow, having reached a peak of over 300 per week in February. By early May, the weekly number of new cases had fallen below 200, a development expected for this predominantly winter disease. Nevertheless, the cumulative number of cases is now approaching 7,000 and 29 states have been affected. PEDv is now starting to have an impact on US hog slaughterings. Since the beginning of March, throughputs at federally inspected plants have been 6% lower than a year earlier, representing an average weekly shortfall of over 100,000 head.

As the number of cases has reduced, US pig prices have also eased back from the peak level recorded in March. Nearby hog futures reached over $125 per 100lb in March but now stand at around $116, still more than $20 higher than a year ago. However, the August 2014 futures contract remains over $125 per 100lb as concerns about supplies over the summer remain.

As well as the US, where the impact has so far been greatest, PEDv has also been reported in several other countries. There have been 58 cases in Canada, mostly in Ontario, but with no new ones reported since the start of May. Outbreaks have also been recorded in Mexico and several other Latin American countries. Rabobank forecasts a near 10% drop in Mexican pork production this year and prices have risen sharply both there and in Canada.

Cases have also been reported in several Asian countries, including Japan, Korea and Taiwan, as well as China, where the new strain is thought to have originated. Having been found in these countries later than in the US, the market impact is only starting to be felt. Nevertheless, prices have begun to rise sharply on these markets too. For example, Japanese wholesale prices rose by over a third between January and April to become more than a quarter higher than a year before.

UK pig price

The EU-spec DAPP for the week ended 24 May was almost unchanged at 164.29p per kg compared with the previous week. As a result prices have now converged with the previous year. The price last week was even marginally lower than a year earlier, the first time there has been a year on year decline since August 2012. Tight supplies last week helped stabilise prices with weekly slaughterings amounting to 152,000 head around 6% lower than the previous year. The average carcase weight fell further to 79.82kg for the week ended 24 May. However, pigs were still around a kilo heavier compared with the same week in 2013. The average weekly probe reached 11mm for the first time since early April. In the week ended 17 May, the GB APP increased by 0.56p to 166.38p/kg, when it was 2.15p higher than the DAPP for the same week.

The weaner market edged up by 32p to £56.53 per head for the week ended 24 May in spite of reported high supplies. This was the second week in succession that prices increased. The weaner market though reflects some lack of producer confidence given the subdued finished pig market so far this year compared with 2013 when confidence was rising. However, breeders still received £7 per head more in the latest week compared with 2013. The weekly average for a 7kg weaner was almost unchanged at £41.07 per head, a continuation of the sluggish market evident since the start of the year.

German trade weakens in the first quarter

The EU’s largest pig meat producer, Germany, recorded a year-on-year decline of 8% in pork exports between January and March this year. This was partly a result of the Russian import ban but also lower export orders from other EU countries, combined with lower live pig imports, limiting production to some extent. The majority of the exports (around 84%) were shipped to the rest of the EU, with Italy and Poland key buyers. However, supplies to both came down, by 3% and 8% respectively. Exports to the Netherlands fell more sharply, by 31% compared with the first quarter of 2013. In contrast, supplies to Austria and the UK increased; German pork to the UK totalled 27,300 tonnes in the first quarter, up 6% on the year. As for other EU suppliers, Asian markets gained some importance in the German export trade. Shipments to South Korea more than doubled in the first quarter of the year, although last year during the same period volumes were unusually low. Much higher volumes were also sent to Hong Kong and the Philippines.

Lower exports meant that the import requirement was lower and so the import market also suffered, whereby foreign purchases fell by 10% on the year. Denmark, Belgium and the Netherlands account for 80% of the total import market and supplies from these countries collectively fell by 12% compared with the first quarter in 2013. This was partly offset by higher pork volumes recorded from Spain, Poland and Ireland during the same period.

As alluded to above, German live pig imports were down 5% year on year in the first quarter of 2014, to 3.4 million head. Weaner imports were down 7% as German finishers continued to face increased competition from their Polish counterparts. Slaughter pig imports were down 2%.

EU trade with Ukraine set to increase?

Two recent announcements suggest that trade in pork between the EU and Ukraine is likely to increase in the coming months. First, with effect from 23 April, the EU provided Ukraine with temporary tariff-free access to its markets for certain agricultural products, including pork. The aim is to support the Ukrainian economy during the current political crisis. Ukraine has not historically been a major exporter of pork. However, with increasing pig meat production and a faltering economy, there may be some scope for exports during the period of access, which is set to last until 1 November.

More recently, Ukraine has announced that it will reopen its market to Polish pig meat. Shipments had been suspended since the ASF cases in Poland earlier in the year but Ukraine now considers that the risk from the disease is over. Reports also suggest that Ukraine is now prepared to accept animal products from any EU-approved companies. Last year, the EU exported just under 50,000 tonnes of pork to Ukraine, although this was down more than 40% compared with 2012. About 70% was sourced from Poland and Germany and they are the most likely countries to benefit from the recent announcements.

Feed market update

As at Tuesday’s close, UK feed wheat nearby futures were £4.10 lower compared with a week earlier, at £147.00/t. Nov-14 UK feed wheat futures closed at £144.00/t, their lowest value since early February. Nearby Chicago wheat and maize price also fell during the last week. Conditions such as the easing tension in Ukraine and encouraging planting conditions in the EU have applied downward pressure to prices. The EU maize crop expectations for this summer have been raised, which may reduce dependence on imports. The EU wheat crop is also reported to be in good condition. This contrasts with ongoing uncertainty about the US wheat crop.

The nearby Chicago soyabeans contract closed at $547/t on Tuesday, up from $540/t a week earlier. As at Friday 23 May, the UK Hi Pro-soyameal (ex-store East Coast) price was £374.00/t (May delivery), up £11 on the week. Rapemeal prices (ex-mill Erith, May delivery) were £2 higher compared with the previous week. USDA government data released on Tuesday revealed that soyabean planting is ahead of schedule across the US Midwest.

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

May Pig Market Trends out now

The May 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:

  • Consumer confidence has shown impressive growth over the last few months. However, the grocery shopping habits developed during the recession are now ingrained and as a result are likely to be slow to change. This article assesses what this could mean for the retail market for pork.

  • Poultry meat on the rise. Chicken is a key competitor for pork and it has shown strong long-term growth, as a cheap and versatile alternative to other meats. Key facts and figures on both the poultry and pig markets feature in the new AHDB/BPEX Pig and Poultry Yearbook and highlights are covered in this article.

  • Global outlook. According to recent forecasts, pork supplies are likely to be tight in many parts of the world this year. With the exception of China, most major importers and exporters will experience lower volumes. You can read more about the details and implications for the global market.

  • Germany. Germany sits at the centre of the EU pig market; it is the largest producer, exporter and consumer of pig meat. As it has trading relationships with most other EU countries, it is the market to watch for the industry across the EU. Read about the latest developments in the German pig market.

  • El Niño is a weather phenomenon, which typically brings drier weather to South East Asia and Australia and can cause severe drought. It is also associated with stronger winter storms in the US and greater rainfall in South America. This article looks at how the increasing likelihood of an El Niño event this winter could affect global grains and oilseed markets.

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