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AHDB Pig Market Weekly

22 May 2014

AHDB Pig Market Weekly - 22 May 2014AHDB Pig Market Weekly - 22 May 2014

Latest trade figures showed that UK pork exports in March were at their highest level since October 1998.


Highest UK pork exports in 15 years

The total was just shy of 18,200 tonnes, 13% up on the same month in 2013. In addition, exports to China/Hong Kong topped 5,000 tonnes for the first time ever (with shipments to China at a record 3,300 tonnes). The proportion of total pork exports shipped to the EU fell but volumes grew by 7% compared with March 2013. While supplies to Germany dropped by 8% on the year and shipments to Ireland were little changed, many other EU markets took significantly more UK pork than last March. However, the value of pork exports fell by 3% to £19.8 million, partly due to the stronger pound but also reflecting the lower value of cuts exported to non-EU markets. Despite a higher requirement from China and Hong Kong, offal exports dropped by 30% on the year during March, to 4,000 tonnes, due to much lower exports to EU markets.

Pork imports also increased in March, up 7% compared with a year earlier to 29,500 tonnes. With the exception of Denmark, whose shipments came down by 16% on the year, trade with other key suppliers rose. Germany became the leading provider of imports, increasing shipments by 26% compared with March 2013. Volumes from the Netherlands and France also rose, by 8% and 17% respectively. As a result of lower prices, the value of imports in March totalled £56.5 million, only marginally up from a year previously. There was also 4% more bacon imported during the month compared with March 2013. Demand for imported sausages also increased by 13% on the year, with higher supplies from across the continent, but other processed imports declined by 6% year on year.

Competitive pricing fails to boost pork sales

Shoppers’ spending on pork was down 5% year on year during February-April, according to the latest Kantar Worldpanel data. The fall in sales affected both fresh and frozen pork, although fresh fared much better due to maintained levels of promotions against a year ago. A small fall in prices meant that pork was even more competitively priced compared to both beef and lamb. However, this did not translate into increased purchasing, as sales volumes were also down. One reason for this is that a year after the horse meat scandal, a re-adjustment in the market has meant that ready meal sales have recovered as consumer confidence has returned to this sector.

Spending on sausages increased 6% over the latest period, compared to a year ago, with growth in both the premium and standard ranges. With premium, the growth was very much price led, as volume sales were down. Whilst prices were also up for standard sausages, albeit at a slower rate, volume sales grew by 2%, helped by increased promotional activity in each of the Big 4 Multiples. The amount of bacon bought this period was down 4%, led by joints and steaks, as levels of promotions fell back. However, volume sales of bacon continue to perform strongly in discounters, where they were up almost 20%. Shopper spend on ham was up almost 5%, led by increases in volume sales, with the discounters contributing the bulk of the growth.

UK pig prices

The EU-spec DAPP for the week ended 17 May rose marginally to 164.23p per kg. While the latest quote represents an upward trend, pig prices are now only very marginally above year earlier levels with an annual difference of 0.20p. The market appears to be well balanced, despite supplies remaining relatively tight; during the week, the estimated weekly kill totalled 150,600 head, around 6% down on a year earlier. For the week ended 17 May, the average carcase weight fell below 80kg for the second time since the turn of the year at 79.91kg; declining weights are normal during this time of the year and average weights remain nearly a kilo heavier than last year.

In week ended 10 May, the GB APP was up 0.05 at 165.82p/kg. This was similar to the trend for the DAPP in the same week, which recorded an increase of 0.11p, so the gap between the two prices was little changed at around 1.8p/kg.

For the week ended 17 May, the 30kg weaner market edged up by 68p to £56.21 per head. At a time when the seasonal trend would typically show uplift, weaner prices have shown some volatility with little clear direction over the last couple of months. At the latest price, breeders received almost £7 more compared with the same week last year. Similarly the price of a 7kg weaner continued to rise from the week before, to £41.09 per head for the week ended 17 May. This was a week-on-week change of 71p per head.

Asian countries dominating the EU export market

At, 116,600 tonnes, latest trade figures for the EU indicate a 6% year-on-year decline in pork exports in March, a considerable improvement from the 19% decline in the previous month. The ASF-related Russian ban left a dent on the EU export market but higher requirements from Asian markets have reduced the impact of the ban. Demand for EU pork was positive across all the key Asian importers, including China and Japan, whose collective share of total exports was around 41%. Supplies to China rose marginally while Japan imported 15% more compared with March 2013. South Korea gained a higher significance in the EU market, as volumes exported increased from 7,100 tonnes in March 2013 to 15,700 tonnes in the same month this year. However, overall exports were subdued as a result of the collapse of trade with Ukraine and Belarus, as well as Russia.

Pig offal exports strengthened by 9% in March, to 82,800 tonnes. Similar to the pork market, excess supplies following the Russian ban were picked up by the Asian markets. China and Hong Kong dominated offal exports, with an increment of 17%, while the Philippines continued to emerge as an important secondary market. Taiwan more than quadrupled its intake, although it still represented only a 3% share of the overall market.

Danish pig numbers up in April

According to the April census results published by Statistics Denmark, total pig numbers increased to 12.3 million head. This was 2% higher compared with the second quarter of 2013. A 4% increase in the number of weaners (weighing up to 50kg) was the main contributor to the overall rise. However, given the continuation of growth in weaner exports, this failed to fully translate into higher numbers of slaughter pigs, which were only up 1% year on year. Given the fall in Polish and German sow numbers, which continued last year, and the outbreak of ASF earlier this year, exports of weaners are likely to continue in the near future; they were up 3% in the first two months of 2014.

The breeding herd remained almost unchanged, with a marginal fall in the total number of breeding pigs. Sows and gilts in-pig both fell 1% compared with March 2013. However, the number of maiden gilts recorded increased by 2% year on year, indicating some positivity for the coming months. Despite a stable breeding herd, the piglet count reached 2.6 million head. This was 1% higher than the same period in the previous year, showing a continued rise in productivity.

Feed market update

Nov-14 UK feed wheat futures dropped below £150/t last week, undoing the entire price rally that was initiated by the Ukrainian situation, while May-14 UK feed wheat dropped £5.95/t over the week. This followed similar drops in global maize markets. Strategie Grains increased its estimate of EU wheat and maize production in 2014, but left the barley estimate unchanged. This is insulating European markets from some of the drought issues in key US wheat states. In general, for feed grains, the upward momentum in prices has now been reversed as a result of the increase to the USDA’s estimates of global maize supplies next year, coupled with higher maize planting over the week.

UK soyameal prices (Hi pro, ex store, East Coast) as of Friday fell £4 to £363/t while rapemeal (ex-mill, Erith) rose £3 to £212/t. These weekly prices are now available through the BPEX website, by clicking here. Nearby futures prices have also fallen, although new crop futures prices changed little on the week. Planting progress for US Soyabeans advanced last week by 15%, bringing the national total planted to 20%.This, in combination with reasonable rapeseed conditions in Europe, has left markets in a fairly benign state for now.

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

Pig and Poultry Pocketbook out now

The 2014 edition of the Pig and Poultry Pocketbook was launched at last week’s Pig and Poultry Fair. The Pocketbook contains the latest facts and figures about the pig industry and similar information for the poultry sector. Areas covered include pig numbers, the supply chain, slaughterings and production, prices (pigs and feed), imports and exports, consumption and carcase classification. The Pocketbook can be downloaded from the BPEX website by clicking here.

Also published at the Pig and Poultry Fair was the BPEX Yearbook for 2013-2014. As well as providing details of BPEX activity over the past year, this report includes key industry statistics and a range of technical data. The data in the Yearbook cover international costs of production, economic and financial performance and physical performance. There are also details of BPEX knowledge transfer, research and development activities. The BPEX Yearbook 2013-14 can be downloaded by clicking here.

DOWNLOAD REPORT:- Download this report here

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