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AHDB European Market Survey


18 June 2012

AHDB European Market Survey - 15 June 2012AHDB European Market Survey - 15 June 2012

French sheep meat imports in the first quarter of 2012 were up two per cent on the same quarter last year mainly due to a rise of nine per cent in March brought about by an earlier Easter.

AHDB

EU pig slaughterings edging down

Total EU pig slaughterings were down by almost one per cent in the first quarter of 2012 compared with a year earlier given fewer slaughter pigs on farms but with very different trends by Member State. There were also considerable differences by month with March slaughterings down four per cent year on year in spite of Easter being earlier this year. In contrast, slaughterings in January and February were both up year on year but last year’s cold winter in the EU had the effect of delaying marketings.

Of the major producing Member States, only Spain, Italy and the UK recorded year on year growth in pig slaughterings. Growth was especially marked in Spain at five per cent, although this was entirely the result of higher marketings in January and February with a decline of four per cent in March. Similar monthly developments occurred in Italy with slaughterings up nearly three per cent in the quarter of a whole. Slaughterings in the UK were up mainly due to a rise of five per cent in January. Germany, the largest producer, accounting for 23 per cent of EU slaughterings, experienced a small fall in the first quarter with lower year on year levels in February and also March. This reflects reduced availability of German finished pigs as slaughter pig imports were up 12 per cent to 1.2 million.

The one per cent decline in France in the first quarter was due entirely to a nine per cent drop in slaughterings in March. Slaughterings in the Netherlands fell by seven per cent in the same month. This contributed to the three per cent reduction in the quarter as a whole despite lower exports of both weaners and slaughter pigs. In contrast, the fall in Danish slaughterings of five per cent in the first quarter was the result of similar year on year falls in each month. Increased weaner exports towards the end of last year contributing to this fall. Of the smaller producers there were marked year on year falls of nine per cent in the Czech Republic, Hungary and Sweden and six per cent in Portugal. Ireland and Romania recorded year on year growth of seven per cent and nine per cent respectively.

Forecasts from Eurostat made in April 2012 indicate that gross indigenous slaughterings in the EU-27 will show no change in 2012 as a whole in spite of a fall of three per cent in the sow herd last December. However some uncertainty inevitably surrounds the forecasts including the fact as to how some producers will react to the forthcoming partial stall and tether ban. Some slaughtering data is available for the first part of the second quarter, and given also the results of the December 2011 pig survey, this would suggest that pig slaughtering will not be up year on year in the quarter as a whole. Carcase weights in the EU edged up only slightly (by 0.2 kg) year on year in the first quarter of 2012 and pig meat production was down 0.5 per cent following an increase of almost two per cent in 2011 as a whole.

Strong growth in Chilean meat production

Over recent years, Chile has experienced rapid growth in its meat production. This has been mainly driven by poultry and pig meat reflecting steady investment in both sectors and opportunities offered on export markets given the high animal health status of Chile. For all four meats Chile has negotiated concessionary arrangements for supplying the EU. The increase in production has continued into the first quarter of 2012, making Chile an increasingly important player in terms of global meat trade. Last year, Chile exported over 100,000 tonnes of pork and was the largest external supplier of pig meat to the EU. It also exported nearly 100,000 tonnes of poultry meat and is a small exporter of sheep meat, but a net importer of beef.

The poultry meat sector remains the largest contributor to Chile’s meat production, with an output of 657,000 tonnes in 2011, up by 11 per cent compared with 2010. This growth has continued in the first quarter of 2012, with production six per cent higher than in the same period of 2011, with a particularly rapid rise in turkey production. Last year, Chile exported 97,000 tonnes of poultry meat, up nine per cent from 2010. The UK was its fourth largest market, after Mexico, China and the US, taking 9,000 tonnes. However, shipments to the UK in the first quarter of 2012 were less than half their level a year earlier, contributing to a one per cent decline in exports overall. The quota to supply poultry meat to the EU amounted to 13,050 tonnes in 2011 and increased to 13,775 tonnes in 2012.

Since 2000, Chile’s pork production has more than doubled. Growth between 2010 and 2011 continued at a similar rate, rising six per cent to 528,000 tonnes. Figures for the first quarter of 2012 showed that the rapid expansion in production continued, up by seven per cent to 134,000 tonnes. The rapid growth in pig meat production is shown in export figures, with the quantity of fresh and frozen pork exported rising by eight per cent in 2011 to 101,000 tonnes. The two main markets are South Korea and Japan which between them accounted for over 60 per cent of the total. Trade with the latter developed as Japan was looking for alternative supply sources for fresh pork in the mid 1990’s when FMD hit Taiwan and Denmark leading to Nippon Meats, one of the country’s largest processors, buying from Chile since 1997. Chile is also the largest external supplier of pork to the EU, shipping 6,900 tonnes in 2011, including 1,500 tonnes to the UK. The duty free quota to supply the EU amounted to 6,300 tonnes in 2011, increasing by 350 tonnes each year.

Total exports continued to rise in the first quarter of 2012, with volumes up by 12 per cent to 26,000 tonnes, helped by big increases in shipments to Russia and Colombia and the opening up of China to Chilean pork. This helped to offset a one third decrease in shipments to Japan, which imposed restrictions following the detection of dioxins in pork from Chile last year.

During 2011, Chilean pig prices increased in line with those elsewhere in the world, despite the increased production. In US dollar terms, the average liveweight price during the year was $1.62 per kg, 10 per cent higher than in 2010. This was reflected in export prices which increased by 16 per cent year on year to $4,000 per tonne. In the early part of 2012, prices have eased back slightly both on the domestic and export markets.

An article covering details of the Chilean beef and sheep meat will be included next week.

Slight increase in French sheep meat imports

French sheep meat imports in the first quarter of 2012 were up two per cent on the same quarter last year mainly due to a rise of nine per cent in March brought about by an earlier Easter. Fresh and chilled imports were up nine per cent on the year to 20,200 tonnes whilst frozen shipments were down 18 per cent to 5,500 tonnes. The average price of both categories was up eight per cent on the year in euro terms.

Total sheep meat imports from the EU were up six per cent on the year although shipments from the UK were down 10 per cent. However, UK customs data appears to contradict this as it shows that UK exports to France were up four per cent on the year. Imports from Ireland and Spain were up nine and 46 per cent respectively given increased production and in the case of Spain lower domestic demand. In addition, shipments were also recorded from Austria during the quarter, in contrast to first quarter imports of previous years. Strong competition from lower priced Austrian and Spanish lamb impacted on the competitiveness of Irish and UK product.

Imports from non-EU markets were down nine per cent year on year. This has been mainly due to a fall in shipments from New Zealand which has seen low availability in the first part of the season and better markets elsewhere.

Live sheep imports were up 55 per cent to 79,000 head in the first quarter of 2012 driven by growth in trade with Spain and Hungary, the two largest supplying nations. Live exports were down by 25 per cent to 179,000 head due to considerably lower demand from Spain.

The price for grade R domestic French lamb at Rungis market peaked after Easter at €7.20 per kg in the week ended 15 April, up 13 per cent since the start of the year. Prices this Easter were around three per cent higher on the previous year led by stronger demand. Prices of domestic product have been higher this year partly because of reduced availability. Lamb slaughterings in January to April 2012 down around four per cent on the same period last year in spite of the decline in net exports. The imported lamb price also peaked in the same week at €6.30 per kg having risen 17 per cent since the start of the year. Domestic and imported prices have since fallen back following seasonal trends as well as weaker domestic demand to €6.40 per kg and €5.40 per kg respectively as of week ended 3 June 2012. The domestic lamb price was still marginally higher year on year at the beginning of June whereas the imported lamb price was down 11 per cent. The premium for domestic lamb over imported lamb has remained fairly constant so far in 2012 at around one euro per kg. In contrast, the premium in early summer last year had fallen to just 20 cents per kg when the imported price was pushed up by shortages but with higher domestic supplies.

South American beef export prices falling back

South American export prices for chilled and frozen have fallen back since last autumn based on data from the Ministry of Agriculture, Livestock and Fisheries in Argentina. This has been mainly due to an easing in global demand for beef as a result of the uncertain economic environment which has also affected Australia, a major competitor to South American suppliers. This is despite the fact that supplies of South American beef remain tight with little change in production in the region and steady domestic demand. In the first quarter of 2012 combined exports of chilled and frozen beef from the four Mercosur countries (Argentina, Brazil, Paraguay and Uruguay) were down seven per cent compared with a year earlier while the overall average price was one per cent lower. For countries such as Brazil and to lesser extent Uruguay, an easing back in their exchange rates against the dollar in recent months has also enabled exporters to reduce their prices. In contrast the Argentine real has strengthened.

In Brazil the average export price of chilled and frozen beef in January to March 2012 was unchanged on a year earlier at US$4,876 per tonne while volumes were down six per cent. Prices were down seven per cent compared with the August to November period when prices were at their peak as exporters found markets particularly difficult at the beginning of this year.

In Argentina shipments continue to be constrained by government restrictions on exports in order to prevent domestic beef price inflation, with year on year volumes declining by 22 per cent in the first quarter of 2012. The average export price was up five per cent compared with the first quarter of 2011, although by March 2012, at US$7,753 per tonne, it was down 22 per cent compared with the peak level of November 2011. Volume shipments to the EU under the Hilton Beef Quota have been lower than a year earlier due to delays in issuing licences by the Argentine authorities, which will have contributed to prices not being as high than might otherwise have been the case.

In the first quarter of 2012 Uruguayan export volumes were almost twice as high as those from Argentina. They were also up 11 per cent year on year in the first quarter of 2012. The average export price was up two per cent at US$5,710 per tonne but still down seven per cent compared with the peak level of last November.

Helped by the steady domestic demand, cattle prices have remained firm in Argentina with the steer price even moving up in recent months. The March 2012 steer price at Liniers market was up seven per cent year on year and eight per cent higher than in November 2011 in contrast to the decline in the export price. In Brazil the Rio Grande do Sul price for steers in March 2012 was down eight per cent on a year earlier, while in Uruguay it was three per cent lower.

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