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AHDB Pig Market Weekly

29 October 2015

AHDB Pig Market Weekly - 29 October 2015AHDB Pig Market Weekly - 29 October 2015


UK market set to remain well supplied in 2016

UK pig meat production is expected to rise in 2016 for a seventh consecutive year, according to the latest supply forecasts from AHDB Pork. Most information suggests a broadly stable breeding herd, so productivity growth remains the main driver of pig slaughterings. Analysis suggests that productivity continues to increase at a similar rate to recent years and there is little reason to think that this rate of improvement can’t be sustained. As a result, clean pig slaughterings are likely to rise again next year, albeit possibly at a slightly slower rate than in 2015. In late 2014 and early 2015, carcase weights were well above year earlier levels but in recent months weights have close to last year’s levels, albeit rising seasonally of late. This trend is expected to continue into next year, so production growth is forecast to be broadly in line with slaughterings and, hence, slightly slower than in 2015.


With the EU market also well supplied and prices on the continent well below UK levels and forecast to stay low well into 2016, a further increase in imported pork is also predicted. Meanwhile, the relatively strong pound is still limiting export growth and the global trading environment is likely to be tough next year. Exports will, therefore, probably rise only slowly, even if the UK gains agreement to export trotters to China. This means that there should again be more pig meat available on the UK market next year. This will keep prices under pressure, with the direction they take depending, as always, on how demand responds.

Strong third quarter for Chinese imports

Pork imports into China have continued to increase throughout 2015, with volumes totalling 518,000 tonnes for January to September, ahead by 22% on the year. As the Chinese breeding herd continues to fall, a surge in imports of pork was recorded between July and September. A record high for the time of year of 198,000 tonnes came into the country, more than 70,000 tonnes higher than in the third quarter of 2014. This builds upon the increasing volumes imported in the first two quarters of 2015, with demand continuing to grow due to tight domestic supplies. The total value of Chinese pork imports for the first nine months of 2015 totalled RMB 5.9 billion (£612 million), up 23% on the year in terms of the Chinese currency.


An uplift in shipments was recorded for all of the major exporters to China during July to September, with the EU remaining as the dominant supplier. Volumes from the EU were ahead by 63% compared to the same time period in 2014. This was largely driven by Germany and Spain, with shipments ahead of the third quarter of 2014 by 72% and 48% respectively. Imports from the UK were also well up, rising by over 40% to 9,000 tonnes. Looking outside the EU, both the US and Canada showed increases for the third quarter of the year. Volumes were ahead by 55% and 26% respectively but this was not sufficient to fully offset lower shipments in the first half of the year.

Following on from the first half of 2015, imports of pig offal continued to be down on the year, with volumes for the third quarter running at nearly 14% lower. Imports from the EU did rise by 18% but this was not enough to offset the declines of 62% for the US and 17% for Canada.

UK pig prices

For the week ended 24 October 2015, the EU-Spec SPP fell by less than a penny to 126.92p/kg. After remaining unchanged last week, the SPP dropped once again, taking the current price to the lowest point since the DAPP series in June 2008. The current quote is 24p down on the same week in 2014. High levels of supply had an impact on prices, with estimated slaughterings increasing by 5% from the previous week to 184,000 head. This is the highest throughput to be recorded in a week since December last year and is 5% higher than the level of slaughterings in the corresponding week in 2014. The average SPP carcase weight recorded its first decline in four weeks, down by 230g compared to the previous week and 590g compared to last year.

The EU-spec APP for the week ended 17 October 2015 fell by a third of penny to 132.01p/kg. This is the seventh consecutive week in which prices have fallen, leaving the quote 24p behind the corresponding week in 2014. The gap between the SPP and APP for the same week remains above the 4p threshold, although slightly reduced from last week at 4.17p.


With the finished pig price easing in recent weeks, both categories of weaners recorded a fall in prices in the week ended 24 October. 7kg weaners were down by just over a pound at £31.79/head, the lowest level since the series began in July 2013. Meanwhile, the 30kg category declined by 22p to £43.03. This is the third consecutive week in which prices have fallen for the 30kg weaners, leaving the quote at its lowest point since November 2012. Overall, both prices remain well below the levels recorded in 2014.

China continues to bolster EU export trade

For the third month in a row, EU pork exports were up on a year earlier in August, increasing by 10% to 142,000 tonnes. This was almost entirely due to the strength of the Chinese market, with shipments more than doubling compared with August 2014. This is the third month in a row when sales of EU pork to China have reached new heights. At 47,900 tonnes, shipments were more than 5,000 tonnes up on the previous record set only a month before. This growth meant that over a third of EU pork exports in August were destined for China. The importance of the Chinese market is emphasised by the fact that shipments to the other major Asian markets, Japan, South Korea, Hong Kong and the Philippines, all fell. These four markets accounted for over half of EU exports in August 2014 but this year took only 500 tonnes more than China did on its own.


Despite the growth in volumes, lower prices meant that the value of exports was only 1% up year on year, at €310.9 million, during August. The increasing diversity of cuts being shipped to China, however, was reflected in a 25% rise in the unit price, meaning the value of this trade nearly trebled.
Offal exports were also higher than a year before in August, rising 13% to 97,100 tonnes. Again growth was led by China, which took virtually half of the total. Lower shipments to the other leading markets, Hong Kong and the Philippines, were offset by strong growth in a range of smaller markets in Asia and Africa.

Small rise in Scottish pig herd

The total number of pigs in Scotland recorded a 0.5% increase in the year to June, to 318,000 head, according to the latest figures published by the Scottish Government. This is the second consecutive year that the total number of pigs in Scotland has increased, the first time that has happened since the late 1990s. The Scottish breeding herd increased by 2% in June, compared to the same point in 2014, to 30,800 head. Sows in pig increased by 2%, while gilts in pig increased by 8% year on year. Maiden gilts recorded the largest increase of 1800 head, or 35%, since June 2014, to 6,800 head. While the increase in maiden gilts could be a positive sign for the Scottish pig herd, it is worth bearing in mind that not all of these maiden gilts may actually end up being used for breeding.


Unlike the breeding herd, the Scottish finishing herd recorded a 0.4% decrease in June, compared to a year earlier, at 278,500 head. Finishing pigs of 80kg and over live weight recorded the largest decline, with pigs under 20kg recording a smaller decline. Nevertheless, the number of pigs between these two weights increased year on year. This suggests that there may be some variation in slaughterings in the coming months but that throughputs are likely to be broadly stable overall.

Feed market update

UK wheat futures (Nov-15) closed up £2.40 on the week at £114.90/t on Tuesday. Dec-15 Chicago wheat and maize futures prices also followed an upward trend. The latest EU crop monitoring (MARS) bulletin was released by the EU Commission on Monday. In the release, EU wheat, barley and maize yields for 2015 were all increased, compared with September’s estimates, due to weather improvements at the end of the EU harvesting season. Dry conditions in parts of Ukraine and Russia raised fears last week about this season’s maize crop and next year’s wheat prospects, giving the grain markets some support. In 2015/16 the Chinese government could reduce their maize purchases by around 50% in a bid to reduce state stock piles. A reduction in Chinese maize imports could put some pressure on global grain prices, dependent on global production this season. In the UK we could feel the pressure on feed wheat prices, due to the direct competition with maize on the feed grain market.

Nov-15 Chicago soyabean futures prices closed at $327.45/t on Tuesday (27 October), down $1.74 on the week. Paris rapeseed futures prices also decreased and UK rapemeal (34%, ex-mill, Erith) prices were £166/t as at Friday were down by £2 week on week. Brazilian soyameal (48% ex-store, Liverpool) also decreased on Friday by £7 to £273/t, the lowest price since December 2011. EU soyabean crushings were substantially higher in August and September 2015 than a year previously according to Oilworld. Soyabean crushings are reportedly benefiting from reduced supplies of rapeseed and sunflower seed in the EU this year.

EU production growth slows in July

EU pig meat production continued to show year-on-year growth in July but, at 2%, the increase was smaller than in the first half of the year. Output totalled 1.87 million tonnes during the month. The overall growth was due to a combination of heavier carcase weights and more pigs being slaughtered. Throughputs were up just under 2%, compared with the same month last year, at 21.2 million head. Nevertheless, daily slaughterings were at their lowest level since the same month last year, as supplies tightened seasonally. The total number of pigs killed in the year to date reached 147.8 million head, 4% more than in the first seven months of last year, with pig meat production up 5% year on year, at 13.3 million tonnes.


One of the main reasons for the slowdown in growth during July was that, for the first time this year, Spain slaughtered fewer pigs than a year before. The same was true of the Netherlands, while France also reduced throughputs. However, this was offset by higher kills in many other major producers, including Belgium, Denmark, Germany and Poland. Despite these varying trends during July, almost all EU countries have slaughtered more pigs so far in 2015 than in the same period last year.

October Pig Market Trends out now

The October edition of Pig Market Trends (PMT) was published on Tuesday. As well as the usual summary of developments in the UK and EU pig markets and the global feed market over the last month, the latest issue includes more detailed articles on:
• Outlook for UK pig meat supplies
• Consumer trends
• EU production and price forecasts
• Global pig market outlook
• Trans-Pacific Partnership

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