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AHDB Pig Market Weekly

05 May 2016

AHDB Pig Market Weekly - 5 May 2016AHDB Pig Market Weekly - 5 May 2016


Pork retail sales return to growth

Some volume growth has been recorded in pork sales in the 12 weeks ending 27 March, according to the latest Kantar Worldpanel data. The amount of fresh/frozen pork sold increased just under 3% on the same period a year earlier, as volume sales of leg, loin and shoulder roasting joints increased 13%, 10% and 6% respectively over the same period. The extra sales of joints may be partially attributed to the Pulled Pork campaign, which recommenced during this monitoring period. Leg and loin roasting joints may have experienced a halo effect from the campaign. The early Easter period this year may also have contributed to the extra volumes of fresh pork sales in the period. These extra sales have come at the expense of value, though, as the average price continues to fall, and spending is down year-on-year throughout all the main fresh pork cuts.

There are still difficulties with sales of chops and steaks and those of the main processed products, which all recorded volume sales decreases in the 12 weeks to 27 March, when compared with the same period last year. Fewer households were buying less, despite the continued decline in average price. Encouragingly, sales of pork ready meals continue to grow, with just under a 3% increase in both value and volume over the 12 week period. Existing customers buying more, rather than new entrants to the category, have driven this.

Beef and sheep meat production forecast higher

Following publication of latest AHDB forecasts for pig meat supplies last week, updated forecasts for beef and sheep meat have also been released. Both show that production is expected to rise this year. Slight improvements in the balance of trade will reduce supplies available for consumption but they will still be higher than last year. This could provide some extra competition for pork among domestic consumers, with the potential to create modest downward pressure on prices.

The latest forecasts for beef and veal supplies suggest that production in the UK will be higher this year. This is due to a combination of higher prime cattle slaughterings, following increased calf registrations in 2014 and 2015, and an increase in cull cows. The latter is largely due to the difficulties which the dairy sector is currently experiencing. However, the increase in slaughterings may be partly offset by lower carcase weights as processors change specifications, including reducing the maximum weight which will not attract a price penalty. This is reported to be a response to consumer demand for smaller cuts as budgets remain constrained.

The latest forecasts for sheep meat predict slightly less lamb will be produced this year but that will be more than offset by higher mutton production. A smaller carryover of lambs from last year’s crop, more lambs to be used as replacements in the breeding flock and a more normal seasonal marketing pattern are expected to contribute to lower lamb slaughterings. However, adult sheep slaughterings are forecast to increase as the low levels seen in the past two years have led to an ageing breeding flock.

UK pig prices

The EU-spec SPP increased for the fourth consecutive week, in week ending 30 April 2016, by 0.30p to 113.79p/kg. Although, once again, it was only a modest increase, it is another week of positive movement and sheds a glimmer of light that the bottom of the market has been reached and prices may start to move northwards again. The forthcoming bank holiday seemed to have little impact on the price, with no evidence of pigs being brought forward a week to compensate for the shorter working week following. The SPP is still over 18p less than at the same period a year earlier, although the gap is starting to narrow slightly.

The average carcase weight decreased again on the week earlier, by 0.63kg to 82.82kg. This is the first time this year that the average carcase weight has fallen below 83kg. The unseasonably inclement and cool weather recently may have adversely affected growing conditions. Estimated slaughterings fell 4% on the week earlier to 169,000 head, but were still 3% up versus the same period last year.

The EU-spec APP also increased in the week ending 23 April 2016, modestly up 0.16p to 116.97p/kg. The gap between the APP and SPP has contracted further from the week earlier to under 3.5p, which is almost 1p less than the same period last year. This may suggest that fewer premium pigs are coming forwards, or those that are have decreased in value at a greater rate than standard pigs.

The 30kg weaners increased again in price in week ending 30 April 2016, by £1.84 to £39.19. However, 7kg weaners fell in price over the same period by £1.06 to £28.52 per head. 7kg weaner prices continue to fluctuate, indicating uncertainty in the long-term market. However, there may be increasing confidence in the 30kg weaner market, now showing 2 weeks of relatively strong growth.

AHDB Pork MI at the Pig Fair

Members of AHDB’s Market Intelligence team will be at the Pig & Poultry Fair next week. Please come and see us on the AHDB Pork stand if you want to discuss anything to do with the pork market, at home or abroad. We would also like to hear your views about the services and publications which we provide and how we could make them more relevant and valuable to your business. Among those attending will be the main regular contributors to Pig Market Weekly, Stephen Howarth, Vikki Campbell and Millie Askew.

Among other things, the event will mark the launch of our annual Pig & Poultry Pocketbook, containing the latest facts and figures about the two sectors. The Pocketbook will also be available online; links and further details will be provided next week. Copies of other AHDB Market Intelligence publications on the pork sector will also be available. You can also hear AHDB Pork Chairman, Meryl Ward, speaking on the Outlook for Pigs at 11am.

Japanese pork imports rising

Although much of the world’s attention has been on China, it was not the only Asian market taking more pork in early 2016. Japan too increased its intake in the first three months of the year by over 20%, compared with the same period last year. At 209,000 tonnes, its purchases were the highest for this time of year in records back to 1994, although China overtook it as the world’s leading importer during the period. As in China, EU exporters have been the major beneficiaries, with shipments up 40% year on year, raising the EU’s market share to 37%, up from 32% in January-March 2015. All the other major suppliers sent more pork to Japan too, although growth was generally slower.

The increased imports have allowed stock levels to rebuild from unusually low levels seen at the end of last year. This suggests that import demand may ease off as we move further through the year. There are already signs of this happening, with annual growth slowing from 36% in January to just 10% in March. Nevertheless, with demand still reasonable and domestic production only recovering slowly following 2014’s PEDv outbreak, imports are forecast by USDA to grow for the year as a whole, albeit at a slower rate than in the first quarter.

EU sow prices remain stable

The stability recorded in the German and Dutch sow prices at the beginning of the year has stayed true through to the end of April, albeit at low M1 sow price averages of around €0.95/kg and €0.83/kg respectively. With the pound continuing to weaken against the euro during the first quarter of 2016, the sterling value of the German cull sow price increased to 77p/kg by the end of March, up from around 70p at the turn of the year. However, in recent weeks, the pound has strengthened slightly, resulting in the sterling value of the sow price falling back slightly, to just under 75p/kg in the latest week. This strengthening of the pound has reportedly led to a slight decrease in the GB cull sow price, following a period of modest strengthening in the first quarter, although levels remain at historic lows.

With the German market setting the tone for cull sow prices, this has influenced the stability recorded in other EU sow prices. For German and Dutch markets, no movement was recorded over the Easter holidays. However, the Danish sow price has rallied since then. The French price has continued to increase slowly since the beginning of the year, following its slump in the last 6 weeks of 2015.
With the EU census figures now published, all major producing member states, with the exception of Spain, have shown a reduction in their breeding herds. This indicates a possible tightening of supplies of both finished pigs and sows going forwards, which could potentially support a recovery in the cull sow price later in the year.

New pork market publications out now

The latest edition of our UK Pig Meat Market Update is out now. It summarises recent developments on the UK pig meat market, covering prices, production, trade and consumption. It also contains a summary of EU pig price developments and an overview of developments in the feed market.

Also out is the spring edition of the Consumer Category Report for pork. This provides on overview of some of the key consumer market trends affecting pork and other pig meat categories. It also provides an update on AHDB Pork’s Pulled Pork marketing campaign. 

Finally, the latest results from AHDB Pork’s PorkWatch survey have been released. This monitors the share of supermarket shelf facings which are devoted to British products and to those bearing the Red Tractor logo. The latest figures, for March 2016, show a slight reduction in the British share of bacon, ham and sausages, compared with two months before, with sharper falls in Red Tractor’s share.

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