AHDB Pig Market Weekly
21 May 2012
AHDB UK Market Survey - 18 May 2012
British pork will soon be on menus in China following a deal reached by Agriculture Minister Jim Paice.
UK pig meat heading for China
He announced the landmark agreement while on a mission to China to boost trade for British food and farming. BPEX Chairman Stewart Houston, who accompanied the minister on the mission, said, “This is a wonderful achievement and something we have been working towards for several years in close co-operation with Defra and the British embassy in Beijing.”
China is both the biggest producer and consumer of pig meat in the world, accounting for nearly half of the global total. Although it is largely self-sufficient, the scale of the Chinese market means that it is still among the world’s largest importers of pig meat. Last year, China imported 467,000 tonnes of fresh/frozen pork and 883,000 tonnes of offal. The total value of this trade was over US$2 billion. Pork imports were more than double those in 2010, while offal exports were up by more than a quarter because of lower domestic production following disease problems and poor profitability. Chinese production is expected to recover this year so imports will likely be lower than in 2011, with some forecasts suggesting they may be down by a quarter.
The United States is the main supplier of pig meat to China, accounting for around half of pork shipments and 60 per cent of offal. The other major supplier is the EU, which last year exported 142,000 tonnes of pork and 269,000 tonnes of offal to China. The value of this trade was €483 million. The main EU Member States exporting to China in 2011 were Denmark, Germany, Spain and France, each of which shipped over €80 million worth of pig meat. Denmark accounted for over half of the offal sent to China from the EU.
As a smaller producer and exporter of pig meat, the UK may not be able to match the main EU suppliers to China. Nevertheless, the size of the Chinese market represents a significant opportunity for UK exporters, particularly given the Chinese preference for offal and other cuts for which there is limited domestic demand. Once trade is established, the annual value could be worth up to £50 million, equivalent to about 20 per cent of current UK pig meat export value.
Cattle market trends
Prices
In week ended 12 May deadweight prime cattle
prices eased for a second consecutive week. While supplies still appear to be comparatively
tight they are running slightly ahead of consumer
demand. This is adding pressure to prices and
pushing them lower. R4L steers dropped a
penny to 344.8p per kg, while R3 young bulls
fell slightly to 330.9p per kg. R4L heifers eased
almost two pence to 342.5p per kg. Cull cow
values also edged lower with the latest overall
price down almost three pence on the week at
264.4p per kg. The price of –O4L graded cattle
was up over a penny at 279.9p per kg however.
Liveweight prices in week ended 16 May
continued to fall with the overall prime cattle
price falling almost two pence to 183.9p per kg.
Unlike in the previous seven days prices for all
classes of cattle fell in the latest period. Steer
prices fell the least being down by less than half
a penny at 184.7p per kg heifer prices fell by
over a penny to 189.1p per kg, while young bull
values dropped four pence to 175.3p per kg.
The number of cattle forward this week was up
11 per cent as the previous week included the
bank holiday which disrupted trading to some
degree.
Trade
UK exports of beef during March were down 18
per cent at 10,300 tonnes. The continued
decline in exports is being driven by two factors.
Firstly lower domestic production is limiting the
volume available for export. Secondly there has
been a considerable decline in EU exports of
beef to third country trading partners. This has
resulted in less beef being required on the
continent. The majority of markets recorded
lower shipments with the exception of Ireland,
Italy and Spain.
These figures take total exports for the first
quarter to 28,600 tonnes, a decline of 16 per
cent on 2011 levels.
Imports for the month of March were up six per
cent at 20,600 tonnes. Much of this increase
came from other EU Member States. There was
a two per cent increase in volumes from Ireland
along with considerable increases in shipments
from the Netherlands, Germany and Poland.
From outside of the EU there were still very
limited volumes, with Namibia, Brazil and Chile
the only countries to record increases.
This takes the full quarter volume of imports to
57,400 tonnes, an increase of seven per cent
year on year.
Sheep market trends
Prices
In week ended 12 May deadweight lamb prices
bucked the recent trend and increased on the week.
At 414.2p per kg the OSL SQQ was up seven
pence on the week, the NSL was up six pence at
467.3p per kg.
Liveweight prices in week ended 16 May were still
drifting downwards on the back of slowed domestic
demand and the weak euro. New season prices fell
eight pence on the week to average 210.7p per kg
while old season values were down 10 pence at
179.3p per kg. Overall supplies were down on the
previous seven days with throughputs six per cent
lower. The shift into the new season is becoming
more evident with numbers up by a quarter while
old season throughputs fell by a fifth.
Cull ewe prices are also slipping with the average
price in week ended 16 May down £1.60 on the
week at £76.40 per head.
Trade
Exports of sheep meat during March were up 14 per
cent on year earlier levels, at 8,900 tonnes. A large
portion of this growth was fuelled by trade with
non-EU countries as volumes to the EU-27 were
only two per cent higher. France took three per
cent more product while Ireland took two per cent
more. Volumes to Germany fell by almost a
quarter.
The non-EU market accounted for almost 13 per
cent of exports for the months compared with only
three per cent in March 2011. Much increased
trade with Vietnam, Hong Kong, Norway, and
Ghana were the main drivers behind this growth.
Hong Kong recorded a substantial increase going
from 26 tonnes in March 2011 to 446 tonnes in
March 2012. Hong Kong has now overtaken Italy
and Netherlands to become the sixth largest market
for UK sheep meat.
Exports for the first quarter of the year were up
seven per cent on 2011 levels.
Imports during March were 10 per cent lower year
on year as supplies from New Zealand fell 10 per
cent, from Australia 14 per cent and from Ireland
21 per cent. With UK domestic demand under
pressure New Zealand exporters have found the
market difficult especially as higher prices continue
to influence behaviour. The unit value of New
Zealand product imported to the UK was up 11 per
cent year on year.
Imports for the first quarter of the year were down
20 per cent as the sheep meat market globally
remains difficult with weakened demand, high
prices and some increased supply.
Pig market trends
Prices
Although the rise in finished pig prices continued
during week ended 12 May, the rate of increase
slowed. The DAPP EU Spec increased by just
0.18p to average 148.39p per kg. The cold and
wet weather isn't helping consumer demand for
pig meat, both at home and in the EU, while the
strengthening of the pound against the euro has
reduced the competitiveness of UK product.
Demand for weaners was limited, with feed
prices remaining high and some seasonal easing
back of prices expected in the autumn, when
today’s weaners will be ready for slaughter. As a
result, the average 30kg weaner price fell be
nearly a pound to £44.29 per head for week
ending 19 May. This was below year earlier
levels for the first time since November.
Trade
UK pork imports remained subdued during
March, continuing the trend from the previous
two months. Shipments were 13 per cent lower
than in March 2011 at 27,200 tonnes, although
this does represent a modest recovery from
February’s low point. Germany and Spain
continued their strong performance, while
Denmark also shipped more pork than a year
earlier. All other major suppliers sent lower
quantities to the UK. Imports during the first
quarter were 15 per cent down on the same
period last year.
Bacon imports to the UK were also lower, with
shipments totalling 25,000 tonnes, eight per cent
lower than in March 2011. This is a slightly
smaller fall than in the previous two months,
with the figure for the first quarter ten per cent
lower than a year earlier. The monthly fall was
driven by a 17 per cent drop in shipments from
the Netherlands, partly offset by small rises from
the two other major suppliers, Denmark and
Germany.
UK exports of pork in March were four per cent
lower than a year earlier at 11,800 tonnes,
although with higher prices the value of exports
rose by nine per cent to £15.2 million.
Shipments to Germany, Hong Kong and the
Netherlands were all lower; with Ireland and
Denmark the main destinations taking increased
quantities. Despite the drop in March, exports
for the year to date were still one per cent higher
than in the first quarter of 2011. In contrast, offal
exports remained strong during March, up by 21
per cent year on year to 3,800 tonnes, despite a
fall in shipments to Hong Kong, the largest
market.
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