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AHDB Pig Market Weekly

04 April 2016

AHDB Pig Market Weekly - 4 April 2016AHDB Pig Market Weekly - 4 April 2016


EU pig meat consumption rises in 2015

The average person in the EU consumed 40.9kg of pig meat in 2015, the largest amount since 2011. Per capita consumption fell between 2011 and 2013 but has now increased for two years in a row, rising by over a kilo in two years. The increase comes as rising EU production was only partly offset by higher exports. Nevertheless, growing export sales meant the EU’s self-sufficiency rate rose from 110% to 112% (i.e. it produced 12% more pig meat than it consumed).

Despite the overall increase, the latest figures show stagnant or declining consumption in many of the Member States in the North and West of Europe, including Germany, France and the Netherlands. However, more pork was eaten last year in most southern and eastern Member States. In the UK, consumption increased slightly to 24.5kg/head but remained among the lowest per head in the EU and was still below the level recorded up to 2012.

These figures are calculated as the balance of production, imports and exports, giving the total supplies available for consumption on a carcase weight equivalent basis. The rising trend contrasts with figures showing declining retail pork sales in most major markets. This suggests that a higher proportion of pig meat is being consumed in foodservice or as processed products, which may fit in better with modern lifestyles. Some may even be used for purposes other than human consumption. All these channels generally deliver less value to producers than retail sales of pork, contributing to the recent decline in pig prices.

US pig herd remains stable

As at 1 March, the US pig herd was at 67.6 million head, a modest increase of 0.4% on the same point last year, according to the latest Hogs and Pigs report published by the USDA. Nevertheless, the latest figure is 1% down on December’s estimates. The total number of pigs available for slaughter as at 1 March was also marginally higher than the same point a year earlier. Breaking it down by weight band, the number of pigs in the lightest weight band, those less than 50lb (23kg), recorded a marginal decrease on the year but there were small increases in heavier bands. This suggests that supplies of slaughter pigs may reduce as the year progresses.

For the winter quarter (December 2015 – February 2016) the total pig crop totalled 29.6 million head, a very slight decrease (0.2%) on the year before. The number of pigs weaned per litter increased 1% on the year to 10.30 but this was offset by a 1% fall in the number of sows farrowed. As at the 1 March, the US breeding herd was recorded at 5.98 million head, virtually static compared to last year. Nevertheless, the number of female pigs intended for farrowing is forecast to decrease year on year in the next two quarters, by 1% in March to May and as much as 3% in June to August. This suggests that US pig producers are also feeling the struggle of low pig prices and production towards the end of 2016 and into 2017 could reduce. As the US is one of the EU’s main competitors on a global scale, a reduction in production from the US could eventually see an increase in demand for EU pig meat.

UK pig prices

The EU-spec SPP saw its second rise this year in the week ending 26 March, up 0.74p to 112.81p/kg. This follows a modest decline a week earlier. These fluctuations infer that the bottom of the market may have been reached for now, although it is too early to state if we may start to see prices increase further. However, this is, encouragingly, the largest recorded weekly price increase since the SPP price series was introduced in April 2014. This also suggests that the short working week before Easter had little downward pressure on price, although it was reported that some processors were still accepting pigs on Good Friday.
Although the average carcase weight fell slightly from the previous week, by 0.4kg to 83.34kg, they still remain at historically high levels. This, again, gives no real indication that pigs were pulled forward early. Estimated slaughterings were down on the previous week, by 9% to 158,000 head. This was largely due to the shorter working week. Similarly, they were down 11% on the same period a year earlier, due to the early Easter holiday this year.

Despite a small fall in last week’s SPP, the EU-spec APP for week ending 19 March saw a slight increase of 0.30p to 116.24p/kg. This infers that more premium pigs may have been coming forward to market, maybe in preparation for the Easter celebrations.

Both 7kg and 30kg weaners recorded price increases in the week ending 26 March. 30kg weaner prices increased marginally to £36.96 per head, while 7kg weaner prices increased by £1.03 to £28.82. While these prices still remain under pressure, and are significantly lower than a year earlier, is it too early to be hopeful that this may be an indication of the first glimmers of confidence returning to the finisher market? Perhaps, but it has been a long time since we’ve been able to report a clean sweep of rising prices.

EU live pig trade reduced in 2015

Following the introduction of new Country of Origin Labelling (COOL) regulations in the EU in April 2015, there was a concern that the trade in live pigs between EU countries could be reduced. Indeed, it would seem that it has had an effect on the live trade between countries such as the Netherlands, Denmark and Germany. There are virtually no live imports into the EU from third countries and only limited live exports to countries outside the EU, mostly to neighbouring countries such as Serbia, Albania and Moldova. The formerly important trade with Russia has now stopped, while trade with Ukraine is much reduced.

The Dutch and Danes exported fewer pigs to Germany in 2015 versus a year earlier and Germany recorded a 7% reduction in the volume of live imports over the same period. Denmark sends over half of its live pig exports, mostly weaners, to Germany. However, this trade decreased by just under 2% in 2015, to 6.89 million head. Overall, the volume of live pigs it exported increased by 7%, largely bolstered by increases in volumes to Poland and Italy on the year.

The volume of live exports from the Netherlands has been decreasing over the past couple of years, and was down 38% to 5.47 million head in 2015 versus 2014. This was largely driven by a decrease in German trade, which was down 48% to 3.04 million head in 2015. This may be partly a result of the COOL rules, with processors less willing to pay for pigs which might require two different nationalities to be recorded on retail packs.

Germany is the largest importer of live pigs in Europe but it also exports both weaners and slaughter pigs and the latter trade was down sharply last year, again perhaps affected by COOL. As a result, Poland imported 2% fewer live pigs in 2015, with the increase in imports of Danish weaners offset by a fall for German slaughter pigs.

Little change in number of English pig abattoirs

The long-term trend of declining number of abattoirs in England slaughtering pigs may be stabilising. Latest figures show that 116 slaughterhouses killed pigs in 2015, one more than in 2014 and less than ten fewer than in 2010. However, the number was around 70 fewer than in 2000. The increasing consolidation of the industry continues, though, with the 13 largest plants, each of which slaughtered over 100,000 head, accounting for over 90% of total slaughterings for the first time. Indeed, the top eight abattoirs made up over three-quarters of the English kill.

There were only 14 specialist pig abattoirs in England last year but they accounted for over 70% of slaughterings during the year. Six of the eight largest plants, in terms of the number of pigs killed, were specialist ones.

Feed market update

UK feed wheat futures (May-16) rose by £1.40 on the week to close at £106/t on Tuesday. Chicago wheat and maize futures also increased. Weather concerns in the US, short covering of funds and the pending release of the US planting intentions survey results have all contributed to the upward movement. Fears of frost damage in some wheat growing regions, combined with dry conditions across the southern Plains, could potentially have a negative impact on production. China is planning on scrapping its maize stockpiling scheme and is going to allow the market to decide the prices of the grain. The aim of the reform is to improve quality and efficiency in China’s agricultural sector.

Chicago soyabeans futures (May-16) closed up on the week, increasing by $2.11 (Tuesday-Tuesday) to close at $336.58/t. As at Thursday 24 March, UK rapemeal price (34%, ex-mill, Erith) for May delivery increased by £5 to £159/t. Global oilseed markets recorded gains for the third consecutive week, supported by stronger trade figures and forecasts. Fund buying in Chicago, ahead of USDA data out next week and the long Easter weekend, was also reported to be a factor. However, gains were perhaps capped by the pending large South American crops, where harvest is gathering pace. Chinese imports of soyabeans are running ahead of current forecasts this season, with further growth predicted for 2016/17. Higher Chinese demand could help soak up some of the global record crops expected this season.

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