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AHDB Pig Market Weekly


01 June 2012

AHDB UK Market Survey - 1 June 2012AHDB UK Market Survey - 1 June 2012

While the recent decline in the lamb price is cause for concern it should be noted that this is broadly following the usual seasonal pattern.

AHDB

Seasonal lamb price decline begins early

As we enter June prices traditionally decline as the influx of new season lambs suppresses prices. The notable point for this year is that this seasonal pattern appears to have occurred earlier and has been suppressing prices for a number of weeks in May rather than beginning in early June.


This can be attributed to the excellent seasonal conditions for much of the year which has resulted in earlier marketings of new season lambs. This has had the effect of bringing the seasonal influx of spring lambs forward. Throughout May AHDB slaughter estimates indicate that lamb throughputs in GB have been on average well ahead of 2011 levels. This is against the trend set throughout the year so far, with supplies tighter than year earlier levels. This tightness of supply was one of the main contributory factors in the firm prices achieved throughout the first quarter of the year.

There is also some evidence to suggest that some producers were holding onto old season lambs in the hope prices would improve. But with end of the old season bringing no such increase these lambs have now entered the market. The two latest weeks of auction market throughputs indicate that there were increased numbers of old season lambs marketed than there were a year ago.

Latest AHDB estimates for GB lamb slaughterings show that in week ended 26 May numbers were four per cent ahead of 2011 levels the previous two weeks had recorded 12 and 23 per cent increases respectively. This has effectively bought forward the seasonal price decline.

With the exceptional prices of 2011 representing such unprecedented levels the comparable with 2010 is a much more telling indicator of the current state of the lamb trade. Looking at this deadweight lamb prices remain ahead of 2010 levels while liveweight prices in week ended 26 May were approximately only seven pence below 2010 levels.

If you take the concept that the season is two weeks ahead of schedule week on week declines of approximately 20 pence in mid-June have been the ‘norm’ in recent years. Eg in the middle of June 2010 the SQQ recorded a fall of over 18 pence to record an average SQQ of 172.4p per kg. In comparison the latest seven day period of data (we 30 May) has shown a decline of 19 pence to average 185.4p per kg.

Analysis of new season lambs within a hypothetical export spec weight band (25.5kg to 43kg) indicates that there is a clear message in the current lamb trade “quality pays”. In the week commencing 27 May the top 25 per cent (by average price) of lambs achieved an average of 227.2p per kg. This premium price has been little changed since the start of May. In contrast the average for the entire weight band was 185.2p per kg, a decline of over 30 pence since the start of May.

This clearly demonstrates that there has been sustained demand for the top end of the market. As such lambs that are in spec and fit the demands of the market place are still producing good returns even in a falling market. Those animals that are not meeting market requirements are obviously attracting much lower competition and are the main reason behind the fall in overall prices over recent weeks.

Cattle market trends



Prices

Despite the liveweight trade increasing over the same period, deadweight cattle prices in week ended 26 May continued to fall. R4L steer prices were down fractionally to average 342.6p per kg, R3 young bulls were also over a penny lower at 327.1p per kg. R4L heifers were down by slightly less than a penny at 340.2p per kg. –O4L cow values increased almost two pence on the week to average 278.3p per kg; however the overall cow price fell marginally to 264.5p per kg.

Continuing on from the rise in the previous week, liveweight cattle prices continued to increase in week ended 30 May. Overall the average prime cattle price was up marginally at 185.9p per kg. Steer prices increased by a penny to average 187.9p per kg, while heifer prices increased by half a penny to average 191.1p per kg. Young bull prices however dropped by over a penny, to 177.0p per kg.

Cull values were still on the rise also, with dairy bred animals increasing almost four pence to average 119.3p per kg, while beef animals increased two pence to 140.9p per kg. With throughputs down 15 per cent on the week tight supplies still seem to be driving the cull cow market.

UK holdings numbers

Figures from Agriculture in the UK indicate that in 2011 there were 60,500 holdings in the UK with beef suckler cows, a drop from 60,600 in 2010. Based on figures from the June census this indicates that the average herd increased from 27 animals in 2010 to 28 animals in 2011. If those herds with fewer than 10 cows are excluded, the average herd size in 2011 was 43 animals up from 42 in 2010.

Of the 1.67 million beef cows, as of June 2011, 457,000 head were in herds of over 100 animals spread across 2,800 holdings. In 2010 there were 443,000 head in herds over 100 animals, spread across 2,700 herds. In the other bandings, the number of herds with between 20 and 100 animals increased with a greater proportion of animals being kept in these herds. The number of holdings with fewer than 20 cows fell from 36,000 to 35,400.

Overall there were 86,200 holdings with cattle or calves in the UK down from 87,500 in 2010. This was driven by a fall in the number of holdings with dairy cattle which fell from 23,700 in 2010 to 22,600 in 2011.

Sheep market trends



Prices

Deadweight lamb prices continued to fall in week ended 26 May as the seasonal decline appears to be well underway. At 441p per kg the latest new season SQQ was down 16 pence on the week. As discussed on the front page, increased supplies appear to be weighing on the market and this is the effect of the expected seasonal decline, albeit slightly earlier than usual.

With demand under pressure these increased supplies have pushed prices down considerably in recent weeks. With lower prices in New Zealand in particular (see this week’s European Market Survey) there is further concern that increased supplies of product from there may have entered the market, or be about to do so, adding to the difficult trading conditions.

Liveweight prices for week ended 30 May show the decline in prices has continued into this week. The positive is that the rate of decline later in the week was slower. Wednesday’s (30 May) SQQ was only eight pence back on the week, compared with declines of 23 and 24 pence earlier in the week. Overall the new season SQQ for the week was back 19 pence to average 185.5 per kg.

UK holdings numbers

In 2011 there were 68,100 UK holdings with female breeding sheep, a decline of around 500 on 2010 levels indicating some producers have left the industry. With increased ewe numbers but fewer holdings the average flock size increased from 215 animals in 2010 to 218 in 2011. If those flocks with fewer than 20 ewes are excluded the average breeding flock size was 264 head up from 262 head in 2010. The vast majority of ewes were in flocks of 125 animals or more.

The total number of holdings with sheep or lambs on them also fell slightly, down from 73,400 in 2010 to 73,000 head in 2011. With increased stock numbers and lower holding numbers the average flock size increased from 423 head in 2010 to 434 head in 2011.

These levels still represent a significant decline since the de-coupling of subsidies in 2005. The 2005 figures showed almost 10,000 more holdings with breeding sheep and 9,000 more holdings with sheep or lambs on them. There has also been a comparable fall in stock numbers, with the 2011 average breeding flock size only one ewe larger than 2005 levels. The overall average flock size is only two sheep larger than 2005 levels.

Pig market trends



Prices

Deadweight pig prices rose again during week ended 26 May, the 13th consecutive week of rising prices. The EU-spec DAPP increased by 0.21p to average 149.23p per kg. This represents the first time the DAPP has been below year earlier levels since April 2011. The improvement in weather is likely to lead to increased demand, particularly with the forthcoming Jubilee weekend, but this hasn't fully fed through into prices yet. High throughputs continue to dampen prices, with clean pig slaughterings over the last month estimated to be seven per cent higher than year earlier levels. The average carcase weight was marginally down on the previous week at 78.44kg but this is more than half a kilo higher than last year, further adding to increased supplies.

Due to the double bank holiday next week to celebrate the Jubilee (week commencing 4 June) no Deadweight Average Pig Price (DAPP) will be published.

The average 30kg weaner price eased back by a few more pennies to £44.07 per head for week ending 2 June as feed costs remained high, with only a limited reduction expected post-harvest.

UK holdings numbers

According to Defra’s Agriculture in the United Kingdom 2011, the number of commercial holdings keeping pigs in June 2011 was little changed from the previous year. There was a total of 10,900 holdings with pigs, around 200 more than in June 2010. Of these, 6,000 had breeding pigs, unchanged from a year earlier, and 9,000 had fattening pigs, up by 200.

These overall figures include many holdings with small numbers of pigs alongside other farming activities. Nearly half of all pig holdings had fewer than ten pigs in total. The number of farms with 300 or more pigs was unchanged at 2,300, just over half of which had over 1,000 pigs. These largest holdings accounted for over 80 per cent of all pigs. A further 3,400 holdings had between 10 and 300 pigs. Excluding those holdings with fewer than ten pigs, the average herd size was 771, slightly lower than the previous year.

More than half of holdings with breeding pigs had fewer than five. There were only around 900 holdings with 100 or more breeding pigs but between them they had 379,000 head, 88 per cent of the UK breeding herd. Excluding the holdings with fewer than five breeding pigs, the average number on each farm was 153, marginally higher than in June 2010.

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