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AHDB Pig Market Weekly


22 June 2012

AHDB UK Market Survey - 22 June 2012AHDB UK Market Survey - 22 June 2012

Weather issues have been the key driver of new crop grain prices this spring.

AHDB


Feed update

UK November 2012 feed wheat prices have recently been trading above £155 per tonne as markets become more anxious over 2012/13 supply levels. Weather in the US Eastern Corn Belt has been hot and dry as maize crops enter into key development stages. This is casting further doubt over the USDA’s current yield forecast, which until August, is based upon historical trend rather than crop condition.

Anxiety in the maize market, transfers directly into the wheat market as these grains are substitutable with one another in global feed rations. It is expected that wheat availability will be lower in 2012/13 due to a number of weather issues. In Continental Europe, winter kill and poor growing conditions in early spring look set to put a check on production. In Russia, dry conditions in mid-May fuelled speculation over crop losses, but rain has arrived since. In Ukraine, winter kill has slashed production forecasts for wheat, diverting land toward maize. This may result in a record Ukrainian maize crop with exports targeted at Mediterranean Europe.

For the UK, crops were seen to have good potential as at the end of May. However, much of June has so far provided poor weather conditions for crops. High disease pressure, lack of sunshine and risk of lodging are all important factors as crops start to build yield.

Protein meal prices remain well supported with UK soyameal prices at record levels and in excess of £350 per tonne. Following the drought impacted South American soyabean crop earlier in 2012, US crops may also be suffering from the extreme heat in the Corn Belt. Import demand from China remains robust.

With so much variation in weather, markets await the clarity of harvest as well as US plantings and stocks data on 29 June.

Cattle market trends



Prices

In week ended 16 June, the overall prime cattle deadweight average price strengthened three pence on the week to average 337.49p per kg. Reports suggest that beef sales are following the changing weather conditions and that the lack of available cattle is resulting in processors struggling to source adequate product. The price of all categories of cattle increased week on week, with R4L steers and R4L heifers both increasing three pence to average 346.0p and 343.8p per kg respectively. The price of R3 young bulls increased by four pence to average 331.5p per kg. For the second consecutive week the price of –O4L cows strengthened three pence on the week to reach a year peak of 282.3p per kg. At this level –O4L cows are 17 per cent dearer than they were in the corresponding week in 2011.

The liveweight trade in week ended 20 June showed a marked rise with the all prime average price increasing two pence on the week to 191.9p per kg. Steers were up two pence to 193.4p per kg while heifers were over three pence dearer at 198.1p per kg. The price of young bulls levelled on the week at 183.7p per kg. In contrast, and despite lower throughputs, the average cull cow price at GB auction markets eased over a penny on the week to 130.9p per kg.

Regional slaughterings

Continuing the trend in the year so far UK prime cattle slaughterings in May remained well below 2011 levels as supplies continued to be tight on the back of lower calf registrations in recent years. The decline in prime cattle numbers was evident in most regions of the UK. In total prime cattle supplies were back eight per cent on the year. Heifer numbers recorded a decline of 11 per cent year on year while steer throughputs fell one per cent. Young bull numbers recorded the largest fall, down 17 per cent, reflecting the low levels of dairy male retentions in late 2010 and early 2011. In the year to date slaughtering are back eight per cent compared to the first five months of last year.

There was also a significant decline in the number of cull cows slaughtered. At 42,000 head cull cow numbers were back five per cent on the year. As with prime cattle, in the year to date cow slaughterings are also back on the year. At 232,000 head they are five per cent.

In May prime cattle carcase weights were higher on the year while cull cow weights were slightly lower. This mitigated the reduced throughputs to a modest degree and overall beef and veal production in May fell six per cent on the year to 69,400 tonnes.

Sheep market trends



Prices

Prime lamb prices remain unusually firm for the time of year. The deadweight SQQ in week ended 16 June increased 15 pence on the week to reach 422.2p per kg. This represents the second consecutive week on week rise at a time when prices would traditionally decline.

Liveweight lamb prices in the week ended 20 June also showed remarkable resilience and continued to buck the expected seasonal decline. The end of last week appeared to herald the resumption of the seasonal fall with prices on Thursday 14 down eight pence and on Friday 15 down five pence on the week. Following the weekend, prices rallied strongly and the SQQ on Monday, 18 June, was up nine pence on the week. This was partly attributed to some tightening of supply with throughputs nine per cent down on the week. However there was also evidently a greater demand for lamb present in the market place.

The strong uplift in the trade on Monday encouraged increased numbers as the week progressed. This has put some check on prices but they have continued to be higher than in the previous week. On Tuesday 19 throughputs of lambs increased 13 per cent on the previous week with the SQQ four pence higher. On Wednesday throughputs were up 20 per cent and the SQQ increased by less than a penny. Overall the weekly GB SQQ recorded an increase of over two pence on the week to average 202.64p per kg.

Regional Slaughterings

At 757,000 head UK lamb slaughtering in May were five per cent higher than in the corresponding month in 2011. In England and Wales slaughterings increased three percent, in Scotland they were up 16 per cent and in Northern Ireland they were up 38 per cent. The large increase in Northern Ireland continues to be the result of fewer animals being exported to the Republic of Ireland.

Lamb carcase weights, in May, were well above 2011 levels, up four per cent on the year to 19.8kg. Much of this increase is attributable to the better seasonal conditions for much of this year. However there are also likely to have been some very heavy old season lambs that had been retained in the hope prices would improve. Adult sheep slaughterings continue to be much lower than 2011 levels with the total in May 11 per cent down year on year at 123,000 head.

With increased lamb numbers and heavier carcase weights mutton and lamb production in May was six per cent higher year on year at 18,400 tonnes.

Pig market trends



Prices

Deadweight pig prices continued their seasonal upward trend during May. However, this slowed in early June and in week ended 16 June the EUspec DAPP levelled on the week to average 149.37p per kg. In recent weeks, the rate of increase has been lower than during the spring of 2011 as poor weather reduced consumer demand and the weaker euro reduced the competitiveness of British pig meat.

The weaner market has been difficult during May and early June, with finishers still reluctant to take on higher numbers while feed prices remain high, especially as these weaners will be finished in the autumn, when slaughter pig prices tend to fall. The average 30kg weaner price eased back by a few pennies in week ended 23 June to £43.07 per head, its lowest level since early December last year. At this price weaners are over two pounds per head cheaper than they were in the corresponding week in 2011.

Regional slaughterings

UK clean pig slaughterings in May were almost six per cent higher than year earlier levels at 753,000 head. This increase was the result of a seven per cent increase in English and Welsh slaughterings and an eight per cent increase in Scottish throughputs. In addition, slaughterings in Northern Ireland were almost one per cent higher on the year. This takes the year to date UK figure to 4.16 million head an increase of four per cent on the corresponding period in 2011.

Cull sow and boar throughputs at UK abattoirs during May totalled almost 19,000 head. This represented a marginal increase on AHDB estimates for May 2011. In the first five months of the year adult pig slaughterings are four per cent ahead of 2011 levels at 109,000 head.

UK clean pig carcase weights in May were marginally higher than in the corresponding period of 2011 at 77.9kg while adult carcase weights were two per cent lower on the year at 151.3kg. As a result of the increased throughputs pigmeat production in May was six per cent higher year on year at 61,500 tonnes and in the year to date totalled 344,000 tonnes, up almost four per cent on the year.

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