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AHDB Pig Market Weekly


11 June 2012

AHDB UK Market Survey - 8 June 2012AHDB UK Market Survey - 8 June 2012

Easter is a key occasion for purchases of meat roasting joints, second only behind Christmas. However, last year the performance of roasting joints was somewhat muted as the particularly warm weather discouraged purchases across all species.

AHDB


Increased promotions boost Easter lamb purchases

Easter is a key occasion for purchases of meat roasting joints, second only behind Christmas. However, last year the performance of roasting joints was somewhat muted as the particularly warm weather discouraged purchases across all species. In contrast, this year the weather over the Easter period was cooler providing a positive impact on purchases of some roasting joints, most evident for purchases of lamb legs.

The above chart highlights the year-on-year Easter performance for the main roasting joints. Lamb leg roasting joints were evidently the best performing having recorded a 34 per cent increase in volume purchases. This comes off the back of a poorer performance in 2011 when there were unseasonably low levels of promotional activity on lamb. However, the heavy promotional activity was back in evidence this year, with 42 per cent of lamb sold on promotion.

These promotions were effective in driving additional purchases of lamb leg roasting joints over the two-week period preceding Easter, compared with last year. Increased promotional activity has also boosted lamb sales in the post-Easter period. With over 57 per cent of leg roasting joints sold on promotion, during week ended 6 May, sales were up considerably both week on week and year on year.

Volume purchases of first quality beef roasting joints were down 13 per cent on the year, largely influenced by a decline in promotional activity. During Easter, 30 per cent of first quality beef roasting joints were sold on promotion; this was down from 41 per cent during Easter last year. Volume purchases of whole chicken remained fairly static over Easter, but there has been a stronger performance during 2012 as a whole with volume purchases up 12 per cent in the latest 12 week data.

Pork roasting joints recorded a seven per cent decline in purchases; this was largely influenced by the poorer performance of leg roasting joints. The strongest performance for pork came from frying/grilling chops where purchases increased 18 per cent. In the two-week period over Easter, 31 per cent of frying/grilling chops were sold on promotion compared to 21 per cent last Easter. Leg roasting joints had lower levels of promotional activity compared with last year and volume purchases were 19 per cent down. The higher promotional activity on chops and lower average price in comparison to beef and lamb has helped drive growth in purchases.

*Due to changes in the timing of Easter we could not directly compare standard periods and therefore have compared the two weeks leading up to Easter in both years.

Cattle market trends



Prices

Deadweight cattle prices generally increased in week ended 2 June. The all prime cattle average increased marginally to 333.9p per kg. The overall steer average increased almost a penny to average 335.8p per kg, despite those graded R4L falling over a penny to 341.5p per kg. Overall the young bull average was up by more than half a penny to 321.6p per kg, while the heifer average was up by less than half a penny at 336.2p per kg.

Overall cull cow values were up despite those graded –O4L falling on the week. At 267.4p per kg the overall cow average was up almost three pence, while the –O4L price fell over two pence to average 276.4p per kg.

The liveweight cattle trade appears to have been buoyed by the Jubilee disruptions in week ended 6 June. This came as tightened supplies were met by increased demand as processors looked to secure supplies in advance of the bank holidays and then restock following them. With fewer sales taking place throughputs of prime cattle for the week were down 24 per cent. Overall the prime cattle average increased five pence to 190.8p per kg. This increase was driven by a six pence increase in the price of young bulls, while steer and heifer prices both increased by over four pence.

The cull cow trade at GB auction markets was subject to the same pressures with throughputs down 41 per cent on the week and the overall average up by over a penny on the week at 133.1p per kg. Although this was purely driven by a four pence increase in beef cow prices as dairy cows fell almost three pence.

Consumption

During the 12 weeks ending 13 May 2012 fresh and frozen beef purchases declined five per cent year on year. In particular, roasting joints and frying/grilling cuts have declined 16 per cent and nine per cent respectively. Overall expenditure has increased seven per cent, which has mainly been driven by the 12 per cent rise in average price to £6.92 per kg. Beef roasting joints recorded the largest price increase, largely influenced by the lower levels of promotions compared with last year. In the past 12 weeks 20 per cent of beef roasting joints were sold on promotion compared with 29 per cent last year. The increased average price and reduction in promotions continue to provide consumers motivation to switch to cheaper protein alternatives, with whole chicken purchases up eight per cent compared with last year.

Sheep market trend



Prices

The deadweight SQQ in week ended 2 June reflected the sharp declines that were being recorded in the liveweight sales at the time. Overall the new season SQQ for GB was down 41 pence at 400.5p per kg.

The liveweight trade in week ended 6 June bucked the downwards trend of recent weeks with prices across the period higher week on week. This uplift is likely to be short-lived as it is attributable to the disruptions to trade caused by the Jubilee celebrations and ensuing bank holidays. Once normal trading resumes expectations are that the seasonal decline will reassert itself.

With processors looking to ure lambs ahead of the weekend, Thursday’s SQQ recorded an increase of eight pence to 198.3p per kg, although this was on the back of a 23 pence drop on the previous Thursday. Monday’s trade was severely disrupted with numbers very low, resulting in a further increase as processors started to try and restock. With a resumption of trading on Tuesday there was strong demand, as restocking activity intensified, resulting in the GB SQQ increasing 19 pence on the week to average 200.6p per kg. Prices on Wednesday were still up on the week but the rate of increase was slower with an increase of 11 pence week on week, although the SQQ was little changed from the day before at 200.2p per kg. Overall the SQQ for the week was up 14 pence on the week before having averaged 199.6p per kg.

Consumption

In the latest 12-week period to 13 May 2012 purchases of fresh and frozen lamb increased six per cent. This was largely influenced by the strong performance of leg roasting joints over the Easter period. There has been increased promotional activity on lamb with 39 per cent sold on promotion over the past 12 weeks compared with 27 per cent last year. Shoulder roasting joints have recorded an eight per cent increase in purchases year on year, while frying/ grilling cuts have declined compared with last year.

Total expenditure on lamb continued to grow increasing seven per cent on the year to £158 million. This was mainly the result of the increased volume purchased as prices increased by only one per cent. Despite increased volumes being purchased, market penetration was lower than in the corresponding period a year ago. With almost 38 per cent of households purchasing lamb in the 12 week period compared with 40 per cent in the corresponding period of 2011.

Pig market trends



Prices

Due to the double bank holiday to celebrate the Queen’s Diamond Jubilee, no Deadweight Average Pig Price (DAPP) was published this week.

Elsewhere in Europe, prices have begun to increase again as improved weather conditions have led to increased consumer demand and supplies of pigs remain tight in many EU Member States. The EU average reference price has risen from €161.37 per 100kg in week ended 13 May to reach €165.18 for week ended 3 June, an increase of over two per cent. This is the highest level recorded since October 2008 and is equivalent to 132.32p per kg, around 13 pence lower than the latest UK reference price.

As is often the case, the EU average price followed a similar trend to the German one, which increased by three per cent from mid-March to reach €171.36 per 100kg in week ended 3 June. Prices in neighbouring countries such as the Netherlands, Belgium and Poland showed a similar rise. Other than the UK, the highest price among major producing Member States was in Spain. Its average price reached €175.21 per 100kg in week ended 3 June, its highest level in nearly six years. This comes despite a five per cent increase in Spanish pig meat production in the first quarter, as steady demand from domestic consumers has been backed by strong export performance; Spanish pork exports were up by 30 per cent year on year in the first quarter.

Consumption

In the 12 weeks to 13 May 2012, household purchases of fresh and frozen pork fell three per cent. There were declines for the majority of cuts with leg and shoulder roasting joints recording the largest declines; down 15 and 17 per cent respectively. This drop has been driven by a reduction in promotional activity compared with last year. As a result of this reduction the average price paid by consumers increased by eight per cent compared with last year. This increase was the sole driver behind a five per cent increase in expenditure on fresh and frozen pork, at £219 million.

Pork belly and loin roasting were the only two cuts to record purchase growth year-on-year with increases of six per cent and 41 per cent respectively. In other products bacon purchases were up nearly four per cent and chilled ready meals increased by five per cent. In contrast purchases of pork sausages fell by five per cent.

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