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AHDB Pig Market Weekly

26 November 2015

AHDB Pig Market Weekly - 26 November 2015AHDB Pig Market Weekly - 26 November 2015


Outlook Conference date confirmed

The AHDB Outlook Conference 2016 will take place on Tuesday 9 February, at One Great George Street in London. Hosted by the three livestock divisions of the AHDB, representing beef and sheep, pigs and dairy sectors, along with AHDB Market Intelligence (MI), the event will explore factors that affect delegates’ businesses in their respective sectors.

Key note speakers will focus on the referendum on the UK’s membership of the EU and the relative competitiveness of UK and global livestock sectors. There will also be opportunity to discuss these important issues. The conference will, as usual, also include separate breakout sessions covering each of the three sectors. The Pork session will cover the outlook for the pig market, including the latest AHDB forecasts for UK supplies, and an overview of feed market developments.

China continues to drive EU export growth

EU pork exports reached the second highest level on record in September, thanks to the continuing surge in shipments to China. Overall volumes were 18% higher than in September 2014, at 166,300 tonnes, a figure bettered only by last October. China alone took over 60,000 tonnes of EU pork, a fourth consecutive record and nearly 13,000 tonnes up on August’s figure. This represented 37% of exports, nearly double China’s share a year before. Excluding China, exports to all other markets were 8% lower than in September 2014, emphasising the importance of Chinese demand at present. Unlike most recent months, exports to Japan also increased, by 4% year on year, but other leading Asian markets took less EU pork. With unit prices remaining lower than a year ago, the value of exports was only up 12% on the year, at €368.8 million.

China was also the main driver of a 9% annual increase in EU pig offal exports in September. Sales to China were up 28% to a record 56,100 tonnes, partly offset by lower shipments to Hong Kong and the Philippines. With unit prices again slightly lower, the value of offal exports was 6% up on September 2014 at €133.6 million.

UK pig prices

In the week ended 21 November, the EU-spec SPP fell by 0.19p, compared to a week earlier, to 126.28p/kg. The current quote continues to run below last year’s price, down by just under 20p. Estimated slaughterings were up by as much as 3,500 on the previous week with a similar increase compared with a year earlier. Throughputs reached 189,200 head, the highest level recorded so far this year. There is still little sign of much upturn in demand associated with Christmas with competition from low priced imports a factor. The average carcase weight fell for the second consecutive week, to 82.14kg, down by just under half a kilo. This was the largest week on week decline since the beginning of July suggesting producers marketed their pigs earlier. This is following the same pattern which was apparent towards the end of November last year, although weights are still down by 110g year on year. The average probe measurement also fell, by 0.1mm to 11.4mm.

The EU-spec APP remained virtually unchanged in the week ended 14 November, down by just 0.01p to 129.98p/kg. The quote continues to run more than 20p below last year’s level. Due to the rise in the SPP between the same two weeks, the gap between the two price quotes for the same week reduced to 3.5p, the narrowest margin recorded since the beginning of 2015.

Both categories of weaners recorded a fall in price in the week ended 21 November, even though numbers traded were also well down. The 30kg weaner price fell for the seventh consecutive week to £41.64/head, a decrease of 50p on the previous week, and was at its lowest level since October 2012. The 7kg weaner category recorded a larger decline of 74p, taking the price to £30.78/head. Both quotes remain behind the figures from the corresponding week in 2014, down by £6.59 and £4.42 respectively.

UK pigs in plentiful supply during October

After a much smaller increase in September, UK clean pig slaughterings were up over 5%, compared with a year before, in October. According to figures from Defra, 1.09 million clean pigs were killed during the month, the highest October figure since 2000. The latest figures indicate that the productivity of the UK herd continues to improve, given that sow numbers are thought to be broadly stable. Some growth was recorded in all parts of the UK, although at 1% in Scotland and 3% in Northern Ireland, the rate of increase was lower than the 6% rise in England.

Average clean pig carcase weights during October were slightly lower than in October 2014, at 81.8kg. While this mitigated the higher slaughterings to some extent, there was also a rise in adult sow and boar cullings, which were 6% above the level a year earlier. Therefore, pig meat production was also up 5% at 92,500 tonnes. Despite being up on the year for a fifth month in a row, sow slaughterings remain within the normal range and there is little indication that low pig prices are having an impact on the breeding herd yet.

Pig farm structures still vary across EU

There are still considerable differences between the structures of pig farms in the Member States of the European Union, according to recently published figures from the 2013 Farm Structure Survey.
Over half the EU’s pig farms are in Romania, with most being very small ‘backyard farms’. In most major producing countries, however, large farms are the norm. Around three-quarters of the EU’s pigs are on holdings with 1,000 or more pigs. Over time, the trend has been towards fewer, larger farms, with a higher proportion of pigs on specialist pig farms.

Feed market update

UK feed wheat futures prices (May 16) have remained relatively stable, closing marginally down on the week at £118.05/t on Tuesday. However, May 16 Chicago wheat and maize futures prices both closed up on the previous week yesterday. Demand for cereals used in animal feed is forecast down by 2% for 2015/16 compared to the previous season, according the latest Defra UK balance sheet published on Wednesday. However, usage of wheat in animal feed is forecast to increase during 2015/16, due to its current price competitiveness compared with other feed grains. The International Grains Council (IGC) cut its forecasts for world maize production for 2015/16 by 3Mt to 967Mt in its latest Market Report. The ICG also forecast a decline in global demand, with a reduction in consumption for animal feed the driver behind decline.
Nearby Chicago soyabean futures traded at their lowest level (in dollar terms) in over six years for a time on Monday, following the Argentine election result, with a daily low around $310/t. Although markets closed higher on Tuesday, they remain close to historic lows. UK rapemeal (34%, ex-mill, Erith) recorded no change on the week at £150/t, while Brazilian soyameal (48% ex-store, Liverpool) was down £10 to £256/t on Friday, compared to a week earlier. Hi-pro (ex-store, East Coast) prices recorded a similar decline of £9 to £244/t. The International Grains Council (IGC) increased its forecasts for global soyabean production by a further 2Mt in its latest market report, as well as increasing its global trade and consumption forecasts for 2015/16.

EU production growth continues in August

EU pig meat production increased by 2% in August, a similar growth rate to that recorded in July but slower than in the first half of the year. Although carcase weights were slightly heavier than a year before, the increased output was largely due to higher slaughterings. 19.9 million pigs were killed during the month, around 400,000 more than in August 2014. EU production for the first eight months of the year was 4% up on the same period last year, at just over 15 million tonnes. Output has been higher than a year earlier in every month of the year to date.

As has been the case for most of the year, the rise in pig slaughterings was led by Spain, where throughputs were 9% up year on year. Germany, the leading producer, increased its kill by 1%, while Belgium, France and Poland were among the other Member States recording growth. However, there were declines in some major producing countries during the month. For example, the Netherlands recorded a 5% annual decline in August. In addition, figures from Denmark, which have been volatile this year, showed an 8% drop compared with the same month last year.

Chinese demand presents opportunity for UK exports

For the year ending September 2015, UK pig meat exports appear to have been more stable in comparison to previous years, when steady growth has been recorded. However, this overall stability hides some important changes.

Total pig meat shipments in the year to September 2015 totalled 273,000 tonnes, a 4% increase on the same time a year before, mainly due to higher exports of pig offals. Within this total there has been a movement from fresh to frozen cuts and further growth in shipments to China. Details about these and other trends in UK exports over the last year can be found by clicking here.

Fall in Welsh pig numbers

Total pig numbers in Wales recorded a fall of 11%, according to new figures from the June Survey of Agriculture and Horticulture. In June 2015, the total number of pigs amounted to 25,300 head, down by over 3,000 head compared with a year earlier. This fall was seen in both breeding pigs and pigs for slaughter, reversing the trend which was recorded in the previous year. Breeding pigs fell by 9% to 4,000 head, whilst slaughter pigs declined by 11% to 21,300 head.

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