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AHDB Pig Market Weekly

04 November 2014

AHDB Pig Market Weekly - 23 October 2014AHDB Pig Market Weekly - 23 October 2014


Smallest UK Pig Breeding Herd Since 2008

Provisional UK figures from the June survey indicate a 4% year-on-year decline in the overall breeding herd, including boars and maiden gilts, to 502,000 head. This was the smallest breeding herd recorded since 2008, largely resulting from a fall in English breeding pigs. Despite better 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, a situation worsened by subdued prices this year.

Looking at the figures in more detail, sows in-pig were down by almost 1% and other sows being kept for further breeding came down by 4%. However, the largest, reduction was recorded for in-pig gilts, which were down by 13% compared with June 2013. With maiden gilts kept for breeding also declining by 7% on a year earlier, this further highlights low producer confidence and suggests expansion is unlikely in the short-term. However, despite a large decrease in the breeding herd, further productivity gains mean that feeding pig numbers were only 1% lower compared with June 2013. Higher pig numbers in Scotland contributed to this to some extent. As such, the total number of pigs on UK farms had declined by 1% in the year to June, to 4.8 million head.

USDA Forecasts Growth in Global Pork Trade in 2015

The latest global outlook report published by the US Department of Agriculture estimates an increase of almost 2% in world pig meat production in 2014 as a whole, to 110.6 million tonnes. Predictions for 2015 also show an increase in output, albeit a slower one, up by 1% to 111.8 million tonnes. China continues to dominate global pork production and is the key driver of overall trends, with production forecast to increase by 3% in 2014 and a further 2% in 2015. However, with Chinese demand for pig meat growing at a faster rate than production, its import requirement is expected to increase, providing opportunities for global exporters. Production in the rest of the world is expected to be little changed this year, with lower output in countries affected by PEDv offset by increases elsewhere. The report forecasts 1% growth in non-Chinese production next year but this relies on a significant rise in US output which will depend on PEDv having less impact next year.

After declining for two years, USDA forecasts that global pork exports will increase by 4% in 2015. Despite stable production being expected in the EU, exports in 2015 are forecast to rise by 2%, particularly driven by robust demand from China and South Korea. This is likely to mitigate the impact of the loss of the Russian market earlier this year. However, the EU is likely to face strong export competition from the US and Brazil. In the US, production is expected to rise by 5% in 2015, with around a 3% increase in exports, with supplies mainly destined for Asian and Mexican buyers. Brazilian exports are exported to rise by as much as 20%, given that it is the largest exporter which still has access to the Russian market.
To read the full USDA report, this also covers beef and poultry meat, click here.

UK Pig Prices

The EU-spec GB SPP fell to 152.35p per kg for the week ended 18 October, down by almost 2p for the second week in a row. Please note that one plant is missing from the SPP sample this week. The normal seasonal increase in finished pig prices is clearly not yet evident and actually, based on comparisons with the DAPP, this is the lowest price since September 2012. Prices remain somewhat volatile as contracts are renegotiated following the end of the DAPP and the true market situation may not be completely clear for another couple of weeks. AHDB/BPEX estimated slaughterings showed a 3% reduction in the week ended 18 October, to 162,100 head. Carcase weights in the latest week edged up to 82.22kg, a marginal increase on the week but the largest weekly average on record. This is reported to be partly a result of more pigs than normal being rolled in recent weeks as supply is outstripping demand.

The EU-spec GB APP for the week ended 11 October fell back by 0.89 to 157.55p per kg. This was almost 4p higher than the SPP during the same week, the largest gap since the two series began back in April.

The 30kg weaner price rose in the latest week ended 18 October, to £50.43 per head. This was a week-on-week change of £1.46. Weaner prices usually start to rise during this time of year. However, it is questionable whether the rise will be sustained given the weak finished pig prices. Despite the weekly increase, the average 30kg weaner price remained £4 below last year’s level, indicating some weakness in this market. In contrast, the 7kg weaner prices edged up by just 8p in the latest week, to £37.66 per head. This was also around £4 lower than the same week in 2013.

September Pig Meat Production Highest Since 1999

September figures published by Defra show a 4% increase in clean pig slaughterings, to 821,900 head. This was the highest September figure for throughputs since 2001. A similar increase in slaughterings was recorded for England and Wales, while 1% more pigs entered abattoirs in Northern Ireland. Slaughterings in Scotland remained virtually unchanged from a year earlier. The rise in September meant total UK slaughterings for the first nine months of this year were 1% above last year’s level, at 7.53 million head.

At, 18,800 head, adult sow and boar throughputs were down by 6% in September this year compared with the same month in 2013, continuing the trend of recent months. This was a consequence of lower prices this year, both for feed and cull sows, encouraging producers to retain their breeding herd. Clean pig carcase weights in September reached a record high level at 81.7kg, almost 3% (2.1kg) higher than a year before. As a result, pig meat production increased by 6% compared with September 2013. At, 69,800 tonnes, this was the highest September production figure since 1999. This took pig meat output for the year to date to 633,800 tonnes, nearly 3% up on a year earlier.

Challenging Times For EU Pig Producers

This time last year, EU pig producers were expecting 2014 to be a positive year. Then came ASF in Poland and the Baltic States and the subsequent Russian ban on imports of pork products from the whole EU. By mid-October, the EU average price was at its lowest level since early 2011 and, despite feed prices also being at a 4-year low, most EU producers were back in the red.

So what does the future hold? Latest EU forecasts suggest supplies will remain relatively tight but this may not be sufficient to provide much support to prices as the Russian ban is now beginning to bite. The extent of any price falls will depend on global market developments such as the extent to which PEDv cases build up again this winter and the level of import demand from China.
To read more about prospects for the EU pig market in the coming months, click here.

Feed Market Update

Global grain prices received a certain amount of support last week as the wet weather in the US grain belt hampered maize harvest progress; Dec-14 Chicago maize futures prices reached highs not seen since the beginning of September. The support filtered into the UK feed wheat futures market, as prices increased by £3.80 from Monday – Friday last week, closing at £116.45/t on Friday. The price dipped at the beginning of this week before gaining again on Tuesday, to close at £116.50/t. On Tuesday, Dec-14 Chicago wheat futures prices closed at $190.77/t, a level not seen since 10 September.

Weather is a key driver of oilseed prices currently, with the US soyabean and Canadian canola (rapeseed) harvests behind schedule and soyabean crops being planted in South America. Paris rapeseed futures (Nov-14) remained fairly stable throughout the last week, fluctuating around the €322/t level. UK rapemeal (34%, ex-mill, Erith, October delivery) was reported at £160/t on Friday, up £2 on the previous week. The Hi-Pro soyameal price (ex-store, East Coast, October delivery) was unchanged again on Friday, at £318/t.
To read more about the latest developments in the feed market click here.

EU Pork Exports Down Again in August

Latest EU pork export figures for August highlight a 10% year-on-year reduction in shipments, to 129,600 tonnes. The decline was largely a result of the loss of the Russian market, coupled with a 13% fall in supplies to China. However, any further falls were mitigated by growth in demand from other key markets. It is worth noting that EU pork exports have gained greater significance in most Asian markets. Japan continued to be the leading destination for EU pork exports, with a market share of almost a quarter. Shipments to South Korea and Hong Kong rose by two-thirds and three-quarters respectively. Higher quantities of pork were also shipped to the Philippines, Australia and the US, among others. With the EU pork export price maintaining some stability in August, the value of total supplies amounted to €313 million, down 10% from the same month in 2013.

At 86,300 tonnes, pig offal exports, on the other hand, rose by 10% in August compared with the same month in 2013. The main buyers of EU pig offal included China and Hong Kong, accounting for around 70% of total supplies. As such, growth in offal exports was driven by increased shipments to these two markets, up by 26% and 17% respectively. Similarly to the pork market, the Philippines also gained further importance in the offal market, as exports more than doubled to this destination. The total value of offal exports in August amounted to €99 million, also up 10% from the year earlier.

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