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AHDB Pork Weekly Export Bulletin

11 May 2012

BPEX Export Bulletin  – Week 19BPEX Export Bulletin – Week 19

A burning topical question relates to the potential effect of the stall and tethers bans to be effective from 1 January 2013.
British Pig Executive Weekly Export Bulletin

A BPEX report prepared in collaboration with the InterPig group in its “most likely scenario” expects some growth of exports to Continental Europe. In this scenario, EU production will fall by 5% and pork prices will increase by 10% in 2012. Three EU countries, the UK, Sweden and Luxembourg are already compliant, 12 further countries expect to be fully compliant by 1 January, 5 countries will be more than 90% compliant, 4 countries should be 70-90% compliant and 3 countries will be less than 70% compliant. However, a rerun of the 2012 egg crisis when the ban of cage hen eggs led to price rises of the order of 60% is unlikely. European production is expected to recover by 2014-15. For the full report, click here.

The Board of AHVLA has approved the decision to replace the Centaur system. The new IT system will make Third Country export health certificates available through internet and should come live by 2013. Exporters have faced delays recently with the delivery of certificates.

An important development which could have some major implications for European retailing is taking place in Italy. This will affect positively meat exports. Please see below.



The European market for fresh meat is still waiting for warm weather for barbecuing. Accordingly the price of legs is under pressure whilst shoulders and collars are moving more slowly. Loins and backs are selling steadily; bellies are under strong pressure in Europe but are selling reasonably in third countries markets. Exports to third country markets are generally satisfactory with fine exports to Japan. China is at a stable level at present supported by the difficulties of importing via Hong Kong. However, there are many indications that prices and quantities have peaked.
(Sources, Danish Crown, Tican, Europa and Food Council).

Danish Crown has stable half-year results

Danish Crown posted a result of approximately € 100 mill year, just € 1.2 m. below last year's. The slight decline comes in spite of an increase in turnover from € 3.3 bn. during the first six months of last year to € 3.7 bn. this year due to the higher cost of meat for processing. The increasing turnover is due the acquisition of D&S Fleisch (De) and Parkham Foods (UK). Danish Crown thinks that earnings may come under pressure in world markets for pig meat as consumers in some areas are reluctant to pay more for it.
(Source, Danish Crown)

Danish Slaughterhouses - payments week commencing 07 May 2012
Slaughterhouse Danish Crown Tican
Slaughter pigs (70.0 – 86.9 kg)
Difference to last week
Euro 1.455
Euro 1.455
Sows (above 129.9kg)
Difference to last week
Euro 1,068
Euro 1,068
Boars (Above 109.9kg)
Difference to last week
Euro 0.935
Euro 0.935


Pork prices RUNGIS week commencing 07 May 2012
Cut name Price range (Euro/kg)
Back fat, rind-on 0,65
Trimmings 1,42
Leg 2,10
Loin including chump 2,82
Loin excluding chump 2,46
Belly extra without trimmings 2,46


Slaughter weights stabilising

The weight of a pig carcase seems to have stabilised at 94 kg as the "ideal wight". It was as low as 80 kg in 1980. However, this represents only a return to German traditions as carcase weights were 94 kg in 1930 and 95 kg in 1950.
(Source, AFZ)

Pork Prices Hamburg Market week commencing 07 May 2012
Cut Name Price range (€/kg)
Round cut leg 2.10/2.25
Leg (boneless, rindless max fat level 3mm) 2.90/3.20
Boneless Shoulder 2.45/2.60
Picnic Shoulder 2.00/2.20
Collar 2.75/2.85
Belly (bone in, ex-breast) 2.30/2.45
Sheet Boned Belly (rindless) 2.25/2.45
Jowl 1.45/1.60
Half Pig Carcasses U class. 2.05/2.15


The “Law 62”

From November, Italian retailers are required to purchase food with a written contract and pay with a maximum of 30 days for perishable products including fresh meat to 60 days for other foods including dry-cured hams. The financing of Italian supermarkets is currently costing some € 300 m. per year in interests to food producers. The food and farming sector and the government of Mario Monti and Mario Catana, the Food and Farming Minister have been duly worried about the lengthening of credit terms that imperils this major Italian economic sector and has led to spade of bankruptcies. Even supermarkets agree that something must be done although they disagree on the terms favouring applying the measure only to Italian SMEs and not on imported food and at a much later date. Italian-owned supermarkets also fear that European retailers will have a financial advantage against them. The Garda di Finanza will fight vigorously against post-dated invoices.
(Source, FoodItalia, see also below under EU)

No fresh pork at Cibus

The Parma food exhibition remains one of the largest in Europe with six halls and 60,000 trade visitors. However, there was little fresh meat on offer and no pork or poultry rather a myriad of specialist producers of dry cured meats from some of the largest brands to the smallest regional players all keen to differentiate their products. This certainly marks a split on the market between a thriving premium offer and the main market. The Milan Tutto Foods fair which takes place in alternative years have a flourishing fresh meat section although it does not compete anymore with Cibus for sheer size.

Pork demand

According to data from ISMEA, pork sales are down 2.0% in volume in the last quarter of 2011 against the same period of 2010. All meat sales are down 3.6% in total, even poultry at -2.7% with only rabbit meat progressing. Penetration remains at 94.3%. Fresh pork sales represent 14.3% of total fresh meat sales.
(Source, Mercati MarkUp)

Tough retail market

The prices of pork products are falling. For example dry-cured ham (defatted) is promoted at € 1.49 (£ 1.27) per 70 g. pack. Cleverly, Simply (Auchan) limits the purchase to four packs. Boneless loin and neck steaks are promoted between € 4.00 and 5.00 /kg (£ 3.40 - 4.25 /kg). Average retail pork prices were € 5.68 /kg in the last quarter.
(Source, Mercati MarkUp, various)

Consumers are depressed

Suicides of owners of small businesses are adding to the gloom. Fresh food sales are slightly up with 2.3% the only FMCG category progressing but buyers are opting for cost saving strategies. However, even if Italian saving ration is falling, they still manage to save 20% of their income, a much higher ratio than in many other EU countries.
(Source, MarkUp, various)

Beretta in good form

Although this major pork processor was prominently not attending Cibus, the results are startling with turnover up 9.2% at € 592 m. on a background of a difficult home market. Exports to the Far East, Australia, Mexico, Canada and the USA are booming at € 143 m. Beretta owns two factories in the USA (California and East Coast) and now two plants in China (Naking and Ma'anshan). In Italy, the company leads a large number of marketing initiatives including a joint venture for ready meals with Fleury-Michon. The holding Beretta company was founded two hundred years ago in 1812 and now employs 1,200 staff. It is still fully owned by the Beretta family.
(Source, Food Italia)


Pork prices Barcelona Market Week commencing 07 May 2012
Cut Name Price range (€/kg)
Carcasses (secondary grade) 1,703/1,709
Gerona Loin Chops 2,48/2,51
Loin Eye Muscle 3,41/3,44
Spare Ribs 2,88/2,91
Fillets 5,38/5,41
Round Cut Legs 2,42/2,45
Cooked Ham 2,05/2,08
Rindless Picnic Shoulder 1,63/1,66
Belly 2,20/2,23
Smoked Belly with Spare Rib Section Cut off 2,63/2,66
Shoulder chap or Head Jowls 1,23/1,26
Back Fat, rindless 1,08/1,11


Major stunt

On May 1st, Pingo Doce, the soft discounter chain part of Jeronimo Martin, reduced all its prices by 50%. Unsurprisingly, the shelves were empty by 2pm. Of course, the chain hopes to benefit from the goodwill of hard-pressed Portuguese consumers with this expensive stunt. Sygma in Italy reduced prices by 25% but only on own label lines.
(Source: various)

Pork prices to rise

Some shortage in supplies is leading to an increase of pork prices which should strengthen during spring.
(Source, Diário de Notícias)


How are major retailers paying their bills?

Supermarket payment terms are a growing problem for food producers. The graph below from Italian research by Cibis D&B/Group Crif shows the extent of the problem. The graph applies to all types of goods and, obviously, the situation is different for meat. It only refers to the respect of contracts. For instance, German retailers pay some goods at 140-160 days. However, this gives a good indication of the extent of the problem. Hence, the worst payers, the Italians, are enacting a “Law 62” (see above). France is the only other country with some kind of legislation and other countries may follow suit.
(Source, MarkUp)


Pig herd falls by 5.6% in first quarter

The census shows a fall to 7,549,700 pigs. Some of the reasons are seasonal as Ukrainians consume more pork in winter but with the weather affecting crops, producers have not rushed to restock. As a consequence, prices are rising by 10% for the first category and imports rose by a factor 2.7. Experts forecast a further rise in May by 4 to 5% to UAH 63 /kg (£ 4.90 /kg).
((Source, PigUA Info)


Ban for German and Czech breeding pigs

Brucellosis was found in two consignments of 620 pigs from Germany to Belgorodskaya oblast and 637 pigs from the Czech Republic. The analysis by three Russian laboratories has been confirmed by the National Veterinary Institute of Pulavy in Poland.
(Source, PigUA Info)


Safeway supermarkets against stalls and tethers

Safeway joins fast food chains McDonald's, Burger King and Wendy's, along with Compass Group, a food service company, who have announced plans to move away from suppliers who use gestation stalls. Hormel, maker of SPAM, has also said it would phase out stalls and tethers. However, none of the above has plans for the short term.
(Source, Reuters)

Pork prices under pressure

Wholesale cuts prices are down 14.1% on last year with belly prices down 38%. Operators blame a surge of slaughter pigs numbers of 4.85%. However, pork is now more able to compete on price with chicken whose price has risen sharply and export sales have been stimulated.
(Source, various)


Disease risks

After a drop in pig prices for 12 weeks in a row there are now reports from China that porcine epidemic diarrhoea in weaners may reduce production of pig meat and lead to higher pig prices on the market in China during the last six months of the year. According to Jean-Yves Chow, who is an analyst with Rabobank in Hong Kong, prices of pig meat will remain low during the third and fourth quarter due to increasing problems with diseases among piglets. He finds that the disease is already present now probably will get worse over the next period and in particular the small producers are going to be most affected.
(Source, Markedsnyt for Svinekod)

The Philippines

CPF invest in pig production

Giant Thai conglomerate Charoen Pokphand Foods (CPF) is investing £ 20 m. in three pig farms in the country with a capacity for 3,600 tonnes of pork with production starting in 2013.
(Source, Asian Agribusiness)

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