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AHDB Pig Market Weekly

26 September 2014

AHDB Pig Market Weekly 25 September 2014AHDB Pig Market Weekly 25 September 2014


Smallest English Breeding Herd in 60 Years

Latest June Agricultural Survey figures published by Defra recorded the smallest English female pig breeding herd in around 60 years, at 329,000 head. This was 5% down compared with the same point in 2013. Despite improving profitability recently, producers were previously in a loss making situation for several years. The industry as a whole has not completely recovered from the losses incurred during that period, despite costs falling below pig prices. As a result, the latest female breeding herd figures reflect producer reluctance to make further investments in expansion at this stage. Sows in-pig declined by 2%, while in-pig gilts were down by as much as 14% on a year earlier. Maiden gilts also recorded a decline of 7% year-on-year, raising further questions about producer intentions in the near future.

The total number of pigs in England declined by 3% compared with June 2013, to just under 4 million head. However, it is worth noting that last year’s figure was particularly (and unexpectedly) high and the increase was not reflected in subsequent slaughterings. In fact, the overall pig herd this year was 8% higher than that recorded for June 2012, which could be a better representation of the general trend in English pig industry. Despite the lower breeding herd, productivity is pushing the overall pig herd to higher levels.

Higher UK Pig Meat Supplies in August

Defra figures published for August showed a 1% increase in clean pig slaughterings compared with a year earlier, to 775,800 head. This was largely a result of a 1% rise in throughputs in England and Wales. Scottish clean pig slaughterings were up by 4,000 head, which helped to offset the impact of a fall in the Northern Ireland kill (down by 5,000 head). As such, supplies in the UK for the first eight months of this year remained around 1% above last year’s level for the same period.

At, 17,400 head, UK cullings of adult sows and boars fell by 7% in August, compared with the same month in 2013. This was the largest decline since the start of the year, which could suggest positive producer intentions, encouraged by the recent declines in feed prices. However, with cull sow prices subdued, it may just indicate a lower rate of replacement. For the year so far, sow and boar slaughterings came down by 4% compared with the January to August period in 2013. The average monthly carcase weight edged up to 80.3kg in August, which widened the annual difference to almost 2kg above 2013 levels. Given the higher supplies and increased carcase weights, total pig meat production in August reached 64,700 tonnes, 2% higher than the same month in 2013.

UK Pig Prices

For the week ended 20 September, the GB SPP rose by 0.05p to 156.12p per kg, the first increase since late June. Industry reports suggest that the rise is partly a result of an improvement in the quality of pigs this week, with fewer over-fat animals. Therefore, this may only be a temporary deviation from the general trend of late, especially as pig prices in the EU continued to weaken. The EU-spec DAPP for the same week remained close to the week earlier level, at 156.25p per kg. The DAPP in the latest week was 14p below last year’s level for the same week. The AHDB/BPEX estimate of weekly slaughterings was marginally down compared to a year previously at 166,900 head. The carcase weight corresponding to the GB SPP came to 81.77kg. This was 210g up from the previous week.

For the week ended 13 September, the GB APP fell marginally to 158.82p per kg. For the same week, the SPP stood at 156.07, marking a difference of nearly 3p between the two price series.

The 30kg weaner price rose by £1.15 to £53.15 per head for the week ended 20 September. A small fall in throughputs this week added some support to the 30kg weaner prices. However, the latest quotation remained £1 below the previous year’s level for the same week. In contrast, the 7kg weaner price edged down on the week, by 68p, to £38.15 per head. The annual difference in the 7kg weaner market is much larger, whereby the weekly price stood £4 below 2013’s level.

A Turbulent Period For The Global Pork Trade

The global pork trade has been through a turbulent period during the last few months. Disease issues in various regions, restrictions relating to the use of feed additives and, more recently, international geopolitics, have all caused disruptions. Nevertheless, despite relatively tight supplies in many parts of the world and significantly higher prices, the amount of pork traded internationally during the first half of 2014 was higher than a year earlier.
To read more about recent developments in the global pork trade and prospects for the coming months, click here.

EU Pork Exports Decline in July

Latest figures published by Eurostat show a 6% year-on-year fall in EU-28 pork exports in July, at 135,400 tonnes. Japan took 70% more pork from the EU as a whole in the seventh month of this year, accounting for almost a quarter of EU exports. This time last year, Russia was the key export destination, with a similar share of the market. South Korea and Hong Kong also increased EU pork imports, by 61% and 19% respectively. Shipments to China, on the other hand, declined by 13% compared with July 2013. These four Asian destinations now account for well over half of the total export market. The US and the Philippines also gained some importance for EU exporters, along with many smaller markets. With only a small rise in the price of EU exports, the value of pork shipments in July 2014 totalled €326.9 million, down 2% compared with the same month in 2013.

At 88,900 tonnes, EU pig offal exports increased by 6% in July, compared with a year earlier, indicating a recovery from the recent slowdown. Export growth was evident in the main Chinese market, which recorded an 18% year on year rise. In contrast, supplies to Hong Kong came down by 11%, compared with July 2013. Together, China and Hong Kong dominate the offal export market, accounting for two thirds of the total. Several other Asian markets recorded strong growth, offsetting the loss of the Russian trade. The price of offal exports in July came down by 5% and, therefore, the value of these shipments totalled €96.8 million, almost the same as a year earlier.

Feed Market Update

UK feed wheat futures (Nov-14) closed at a new contract low of £109.75/t on Tuesday, down £2.85 on the week. Chicago wheat and maize futures both declined by over $7/t over the week. The main driver behind the price falls is the positive outlook for grain supplies this season and the continued upward revision of production estimates. In their latest forecast, Strategie Grains increased their estimate for 2014/15 EU wheat, barley and maize production. Ukraine is also expected to produce more feed wheat this season.

Over the past week, Chicago soyabean futures (Nov-14) have closed at a contract low each day since last Thursday. Weekly sales of US soyabeans for the 2014/15 marketing year were above trade expectations and sales of new crop US soyabeans have continued to be strong. Hi-Pro soyameal prices (ex-store, East Coast, September delivery) were £328/t on Friday (19 Sept), down £1 on the previous week. Rapemeal prices (34%, ex-mill, Erith, September delivery) were £160/t, £7 lower compared with the previous week.
To read more about the latest developments in the feed market click here.

Margins Remain Positive for Most Pig Producers

Latest AHDB/BPEX estimates for the cost of pig production show that, on average, producers have now been making positive margins for over 12 months. The overall cost of production estimate covers the whole pig production cycle, from service to slaughter. However, the model also allows us to break costs down between breeding and feeding stages. Based on 7kg weaner prices, new analysis suggests that margins have generally been better for breeding than finishing in recent years.
To read more about production costs for different types of pig producer, click here.

Danish Pork Exports Higher Despite Russian Ban

Danish pork exports in the first half of this year totalled 551,200 tonnes, up 2% from a year earlier. There were higher supplies for the export market, despite a small fall in production, suggesting some weakness in the Danish consumer market. Shipments to the EU increased, whereby Germany remained the main market, taking 5% more Danish pork compared with the first half of 2013. With the exception of Poland, where exports were down by 16%, supplies to the other key EU markets also rose. For example, in the UK and Italy, 2% and 5% more Danish pork was available compared with first half of last year. Amongst the international markets, Denmark further secured its place in the Japanese market, where pork exports increased by 38% on the year before. Shipments to Australia and China rose by a quarter and 18% respectively. The overall growth came despite the loss of the Russian market, which took 34,000 tonnes of Danish pork (6% of total exports) last year. The total value of Danish pork exports in the first half of this year was DKK9.3 billion (€1.24 billion), similar to 2013’s level.

Live pig exports increased by 13% in the first half of this year compared with January-June 2013, to 5.8 million head. Around 90% of live pigs traded were destined for Germany and Poland. There were 5% more pigs shipped to Germany, while Polish purchases rose by 33% compared with a year earlier. The value of live pig exports totalled DKK3.1 billion (€422 million), up 16% from the previous year. The ongoing growth of the weaner trade contributed to the fall in Danish pig meat production and continues to put pressure on the country’s processing sector.

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