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AHDB Pig Market Weekly

10 October 2014

AHDB Pig Market Weekly - 9 October 2014AHDB Pig Market Weekly - 9 October 2014


Premium Sausages Still Important Despite Sales Fall

GB retail sales of sausages were down 2% (18,000 tonnes) in the year ending September 2014, according to Kantar Worldpanel. With sales of standard-tier sausages increasing by 4%, the decline has been focused on premium sausages. Compared with last year, average prices paid have risen by 6% and it appears that price conscious shoppers have traded down to manage price inflation.

Despite improving news on the UK economy during this year, average wage rises continue to lag behind inflation. This means that most shoppers are not feeling better off and savvy shopping remains the order of the day.

Premium sausages still retain a 31% share of sausage category volume. This is considerably higher than both bacon and ham. A key reason for this is the price difference between premium and standard tiers across the categories.

Premium sausages are only £1.17/kg more expensive than their standard counterparts, compared to a difference of £8.51/kg for ham and £5.00/kg for bacon. This makes sausages an easier ‘trade up’ for shoppers who are looking for a treat.

Scottish Pig Herd Stabilising

According to the figures published by the Scottish Government, the overall pig population stood at 316,300 head in June 2014. This was 3% higher compared with June 2013. The Scottish pig herd has declined steadily since late 1990s but in the last year, the breeding herd and feeding pig numbers rose for the first time since 2010.

The Scottish breeding herd reached 30,200 head, up 5% year on year, with an 8% rise for in-pig sows. However, both in-pig and maiden gilt numbers came down, by 16% and 8% respectively, indicating some weakness in producer confidence going forward.

The total number of feeding pigs, which includes piglets, rose by 3% on June 2013. This was largely a consequence of a 16% increase in the heaviest weight band (over 80kg liveweight), while pigs under 20kg were up by 2%.

With a 5% increase in the breeding herd but piglet numbers only 2% higher than the previous year, this could indicate a slowdown in productivity. However, it may be attributable to increased movement of weaners to be finished in England. This might also explain why the number of pigs between 20kg and 80kg recorded a small fall during the year.

UK Pig Prices

For the week ended 4 October, the EU-spec GB SPP edged up by 0.41 on a week earlier, to 155.62p per kg. This increase came despite industry reports indicating ongoing weak demand and is probably the result of changes to some contracts following the end of the DAPP last week. This could lead to further volatility in prices over the next few weeks.

However supplies may also have tightened slightly, as AHDB/BPEX estimate that weekly slaughterings were 4% down on a year earlier, at 170,300 head. The average weekly carcase weights continued to rise, with the latest quotation at 82.05kg. This was marginally higher than the week before but was the heaviest average weight recorded since the SPP began in April and probably constitutes a record high.

The EU-spec GB APP for the week ended 27 September fell slightly to 158.14p per kg, down by 0.59p on a week earlier. During the same week, the SPP stood at 155.21p per kg, which was a difference of nearly 3p between the two price series.

For the week ended 4 October, the average weekly price for a 30kg weaner continued to decline to £49.17 per head, down by almost £3 on the week before and its lowest level since April 2013. The weaner price usually mirrors trends in the finished pig prices and this was evident again in the latest week.

The 30kg weaner price has fallen further below last year’s level, currently down by £5 on the same week. The 7kg weaner market also edged down to £37.88 per head, a week-on-week change of 6p. This was around £3 lower than the same week in 2013.

As last week’s DAPP was the last to be published, those who previously received the DAPP by text will, in future, receive the SPP instead. If you are not already subscribing to this service and would like to, please click here for details of how to do so.

A separate service proving a weekly text message with the APP is also now available. For those who prefer it, both the SPP and APP are available via e-mail, free of charge. E-mail [email protected] with your contact details, indicating which price series you want to receive, to access this service. Both price series will also be available through new web pages (links in the data table above).

EU Weaner Price at Three Year Low

The EU weaner price has fallen to its lowest point for the year so far in the last week of September. At €38.96 per head, the EU average weaner price for the week ended 28 September was €11 below the start of the year and was the lowest price recorded since November 2011. Weaner prices had remained above last year’s levels for most of the first half of the year.

However, since mid-July, the annual price comparison showed EU weaner prices below year earlier levels and for the latest week, the average marked a difference of nearly €9 below 2013 levels for the same week. The weaner price usually mirrors finished pig prices, albeit with a slightly different seasonal pattern. The weakness in the market is, therefore, largely influenced by lower producer returns of late for finished pigs, despite falling feed prices.

EU weaner prices weakened the most in the third quarter of this year, largely affected by the key weaner markets in Belgium, Germany and the Netherlands, where prices had come down by €18 since the start of July. Amongst the other key markets, prices generally held up somewhat better, as Spain and France recorded a €10 decline between July and September.

In contrast, the Danes were in a better position compared to the other main markets, where prices weakened by €3 during the third quarter. This was partly due to the comparative strength of the Polish weaner market, where prices were broadly stable, encouraging further growth in its imports of Danish animals.

Russia Now the Key Export Market for Brazil

Latest figures published for the third quarter of 2014 show an 18% decline in Brazilian pork exports compared with the same period in 2013. This was mainly due to the collapse of the Ukrainian market, which took around 23% of all exports last year. In addition to that, there was a 22% decline in shipments to Hong Kong, which is Brazil’s second largest market. However, the decline was somewhat offset by a strengthening position for the Russian market.

This was mostly evident in September, as exports to Russia rose by 77% year on year. Last September, Russia accounted for 24% of Brazilian pork exports but, with EU, US & Canadian pork excluded from Russia since August, the significance of the Russian market to Brazil exporters increased, taking its share to nearly half. As such, Russia has become the key destination for pork exports, as Brazil is the only major global exporter which still has access to its market.

Alongside the rise of trade with Russia, the other notable development has been the sharp increase in export prices for Brazilian pork. Prices were already strong due to the tight global supply situation caused by PEDv outbreaks in North America and Asia. The Russian ban has pushed unit prices higher still; by September unit prices were up 43% on a year earlier in real terms, at R$9.29 per kg. Prices of shipments to Russia had risen even more quickly, reaching R$12 per kg in September. As a result, the value of Brazilian exports during the quarter totalled R$911.0 million, up by 13% compared with the third quarter in 2013, despite the drop in volumes.

Feed Market Update

UK feed wheat futures have seen upward movement over the past week following the trend set by international wheat markets and have moved back above the £110/t level. A slight weakening of the Pound against the Euro also offered some support. The Nov-2014 contract closed at £114.50/t on Tuesday, a gain of £6.80 from the previous Tuesday. Chicago wheat futures (Dec-14) have gained $10.47 since last Tuesday to close $175.53/t, partly due to strong US and EU wheat export sales. Chicago maize futures also saw gains, as rains slowed the ongoing US harvest. Markets will be looking to Friday’s USDA report for further indication of US maize yields and production.

Soyabeans dominated oilseeds headlines throughout the last week, with the market reacting mainly to the forecast bumper US soyabean harvest. Over the past week, Chicago soyabean futures (Nov-14) have increased by $10.10 to close at $345.63/t on 7 October. Reports that rain was slowing harvest progress and continued strong export sales gave support to prices. The UK Hi-Pro soyameal price (ex-store, East Coast, October delivery) was unchanged from the previous week at £318/t on Friday.
To read more about the latest developments in the feed market click here.

Belgian Pork Exports Slightly Down on Last Year

Belgium is a net exporter of pig meat and in the first half of this year the country exported 347,400 tonnes of pork. This was 1% lower compared with the January to June period in 2013, although volumes were unusually high last year, so exports were 5% up on 2012. Germany and Poland are the main destinations for Belgian pork, accounting for nearly two thirds of total exports. With Germany taking around 40% of the pork shipments, a 3% fall in its intake was more than offset by a 19% increase in exports to Poland.

The remaining third of the exports were distributed to various smaller markets. Supplies to the Netherland and Italy were down by 9% and 20% respectively. Belgium exports pork to the UK, including significant numbers of full or half carcases, but overall this is a fairly small trade and in the first half of the year, supplies were down by almost 1% on the year before. As a result of a 3% fall in the price of Belgian exports, the value in the first half of the year totalled €647.3 million, down 4% on a year earlier.

Belgium imports a small amount of pork and in the first half of this year supplies amounted to 34,900 tonnes. This was 7% up on a year earlier for the same period. The main sources include the Netherlands, France and Germany. Supplies from these markets were up slightly compared with last year. The value of pork imports totalled €70.6 million, down 1% on 2013 for the first six months of the year.

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