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AHDB Pig Market Weekly

11 September 2014

AHDB Pig Market Weekly - 11 September 2014AHDB Pig Market Weekly - 11 September 2014


Indoor breeders drive productivity growth

Latest physical performance data from Agrosoft show a further improvement in GB breeding herd performance overall, with the number of pigs weaned per sow per year averaging 23.6 in the year to June 2014. This was up from the 22.9 recorded in the previous 12 months, although a change in methodology means the figures are not directly comparable. The increase was driven by indoor producers, who weaned an average of 25.6 pigs, up by 1.5 on a year earlier. Improvements were recorded for each of the key measures contributing to the average: litters per sow per year, piglets born alive per litter and pre-weaning mortality.

In contrast, overall productivity of outdoor producers was actually slightly lower than in the year to June 2013, averaging 21.6. A slight improvement in the number born alive per litter was offset by higher mortality rates and a small drop in litters per sow.

Performance also improved somewhat in the feeding herd over the last year, according to the data. The feed conversion ratio in the rearing stage was marginally better at 1.73 but there was a faster improvement in the finishing herd, where the FCR was down from 2.81 in the year to June 2013 to 2.66 in the following 12 months. Daily weight gain was higher than a year earlier in the rearing herd, up from 488g to 511g/day, with little change in the finishing herd, at just under 800g/day.

More detailed figures for these and other physical performance indicators can be accessed through the BPEX website, by clicking here.

Producer share at lowest point in two years

According the latest farm to retail price spread for August, producers received 40% of the overall retail price, the lowest point since the start of the year. Indeed this was the lowest producer share in two years. This was almost 2% down from the previous month, resulting from lower farmgate pig prices. As such, the latest producer share of the total retail price was almost 6% lower compared with August 2013. Bacon prices are not yet available for August, but the July figures showed the producers’ share at 37% of the total retail price. This is marginally lower than in the previous month but 2% down on the same month in 2013.

Retail pork prices have generally declined in August compared with the previous month, with the exception of boneless legs, minced pork and traditional pork sausages. Fillet end leg and loin steaks recorded the largest month-on-month decline, being back 4%. The annual comparisons showed similar trends, retail pork prices across most categories declined, with the exception of loin chops which recorded a 13% rise. Declines in retail prices ranged from 7% for traditional pork sausages to 1% for minced pork, boneless shoulder and loin steaks. Fillet of pork and boneless leg retail prices decreased by 6% on a year earlier.

UK pig price

The GB SPP edged down for the 10th consecutive week, to 156.91p per kg. This marked a week-on-week change of 0.26p per kg, although this was the smallest fall during this period of decline. Despite schools re-opening in the previous week, demand remained somewhat subdued and lower pig prices across the EU added further pressure to the soft UK prices of late. The EU-spec DAPP also fell marginally, by 0.41p to 157.06p per kg. As the finished pig price reached the lowest point of the year so far, the annual gap widened, falling 12p below year earlier levels for the same week. After the bank holiday disruptions last week, AHDB/BPEX estimated weekly slaughtering rose to 169,100 head, up 11% from the previous week and 2% from a year earlier. Carcase weights continued to rise, reaching above 80kg for the first time since May, at 80.55kg. As has been the case recently, pig weights remained above last year’s levels, by 900g in the latest week.

The APP for the week ended 30 August edged down by 0.54 to 159.66p per kg. The SPP for the same week stood at 157.17p per kg, a gap of 2.49p.

For the week ended 7 September, the 30kg weaner price fell by £1.19 to £52.56 per head. The weaner market mirrored the finished pig prices and remained around £1 below the previous year’s level. This indicated some weakening in demand for weaners, with reports suggesting a shortage of finishing places available. The annual gap in the most recent weeks has shown negative price differentials, suggesting a noticeable shift in the price level for the first time in more than 12 months. Similarly, the 7kg weaner market edged down by 78p to £38.46 per head. This was nearly £2 down compared with the same week in 2013.

Food price inflation reaches new low

Latest figures from Kantar Worldpanel, show that grocery price inflation fell for the eleventh consecutive period in the 12 weeks ended 17 August, standing at just 0.2% – the lowest level since October 2006, when Kantar Worldpanel began this specific measure. Food inflation has fallen as competition between retailers has driven down the price of staple items, such as vegetables, milk and bread. This has impacted on the overall growth of the grocery market, which has fallen to a 10 year low of 0.8%.

The trend is backed up by recent ONS consumer price data. This competitive pricing in the grocery market has brought retail price inflation for food down to -0.1% in July, its lowest level since March 2006, compared to 3.8% a year ago. This trend has been followed by retail meat prices, which were unchanged from July 2013, having risen by nearly 5% in the previous 12 months. Throughout the year, annual pork price inflation has fluctuated between a peak of 7.6% and low of -4.8% and it stood at 1.1% as of July, down from 4% at the same time last year. However, having risen steadily during 2013, bacon prices were down by 2.4% in the year to July.

Higher Spanish exports in first half of year

At 507,300 tonnes, Spanish pork exports strengthened in the period January to June 2014 compared with the year before. Lower feed prices, genetic improvement and faster growth rates of pigs secured additional supplies on the Spanish market. As such, there was higher availability of pork for the export market in the first half of this year and shipments were up 8% on the year, despite the loss of the Russian market post the ASF outbreak in Poland and Latvia. The EU accounts for over three-quarters of total Spanish exports and trade with the continent strengthened by 7% in the latest period.

Spain supplied a quarter of its pork to France in the first half of this year but this represented a reduction in the importance of the French market, as volumes shipped fell by 4% on a year earlier. Similarly, Portugal, which is the third largest market for Spain, bought marginally less pork compared with the January and June period in 2013. However, exports to other European destinations increased, including Italy (up 18%), Germany (up 7%) and the UK (up 22%). As has been the case across Europe, Spain is supplying increasing volumes of pork to Asian markets. As such, supplies to Japan and South Korea more than doubled, while a quarter more was shipped to China. These three Asian markets accounted for 16% of total trade, as opposed to 10% last year during the same period. This helped to offset the loss of the Russian market, which took 6% of Spanish exports last year. The value of Spanish exports in the first half of this year totalled €1.2 billion, up 11% from a year earlier.

eed market update

Last week saw the Nov-14 UK feed wheat futures price falling below the £120/t mark, signifying continued bearishness in the UK feed wheat market. On Tuesday, Nov-14 UK feed wheat prices settled at £118.05/t, a fall of £2.95 over the week. Another market test was the Nov-14 Paris wheat futures falling below €170/t on Tuesday. Bearishness in the UK grains market was also echoed globally, with Dec-14 Chicago wheat futures declining by $10.11 over the week, and closing at $193.80 on Tuesday (9 September). Chicago and Paris maize futures also fell during the week.

The amount of GB raw materials used in the retail production of animal feed was down by 2.6% in July 2014, compared with last year, with a slightly higher cereal incorporation rate. In July, there was proportionately more barley and maize being used instead of wheat in the feed ration.

UK soyameal (hi-pro, ex-store, East Coast) prices closed £5 lower on the week at £335/t, and UK Rapemeal (34%, ex-mill, Erith) was up £5 at £171/t. Dec-14 Chicago soyabean prices closed down $14.42 since the previous week on Tuesday at $364.74/t. Nov-14 Paris rapeseed futures closed at €324/t, also down €2.50 on the week.

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

Chilean and Brazilian exports to Russia increase

Following the Russian bans on EU, US & Canadian imports, Brazil and Chile are the main pork exporters which still have access to the Russian market. Latest figures published by Chile Customs show that, at 66,200 tonnes, pork exports fell by 9% in the first seven months of this year, compared with the same period in 2013. This was a direct consequence of lower availability led by production shortages. For the period as a whole, Russia accounted for 14% of total exports, with a 1% year-on-year decline. However, even before the Russian ban was extended to the North American countries, the monthly figures for July recorded a more than doubling of pork exports to Russia, increasing from 1,400 tonnes in July 2013 to 3,200 tonnes this year. As such, the significance of the Russian market increased to 27% in July 2014. At the same time, the unit price of exports to Russia rose from just under US$3 per kg a year ago to nearly $5 this July.

Brazilian pork exports in the first eight months of this year totalled 270,800 tonnes, 7% down on the previous year. The Brazilian export price increased by 29% in the first eight months of this year, led by limited availability on the back of a reduced pig herd, combined with higher import requirement from Russia (up 18%). As such, Russia gained a stronger influence on the Brazilian export trade, accounting for 41% of total volumes, compared with just over a quarter in January to August 2012. By August, the year-on-year rise in export prices had reached 33% and shipments to Russia were over 50% more expensive. The full effect of the new Russian ban will become more apparent when September trade data are released in a month’s time. With the sharp increase in price, the value of Brazilian pork exports in the year to date rose by 20% to over R$2 billion.

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