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AHDB Pig Market Weekly


11 July 2012

AHDB UK Market Survey - 6 July 2012AHDB UK Market Survey - 6 July 2012

As the market remained buoyant, in week ended 30 June the overall prime cattle deadweight average price strengthened almost two pence on the week to 340.5p per kg.

AHDB

Auction Market Update

The total number of cattle sold through GB livestock markets in the first six months of the year was down eight per cent on the year at 153,000 head. This is in line with the decline in prime cattle slaughtering over the same period. Steer and heifer throughputs both fell by eight per cent while young bull throughputs were nine per cent lower. These tightened supplies have done much to keep prices buoyant. Overall the average liveweight prime cattle price in the first six months of the year was 187.6p per kg, an increase of almost 30 pence year on year. This was driven by similar increases for all classes of prime cattle.

Supplies of cull cows at GB auction markets have also been considerably tighter than in 2011. At 95,000 head cow numbers in first half of the year were eight per cent lower than 2011 levels. This reflects the decline in national slaughterings, which in the year to May were down six per cent on the year. The number of dairy cows marketed at auction were only three per cent lower while beef bred animals were down nine per cent. As with prime cattle these tight supplies have created upwards pressure on prices and at 128.1p per kg the all cow average price in the first six months of the year was almost 18 pence higher on the year.

Throughputs of lambs in the first six months of the year were only two per cent lower year on year at 2.76 million head. However, there is some disparity between the number of old season and new season lambs. Throughputs of old season lambs were marginally higher year on year at 2.15 million head while in contrast throughputs of new season lambs were back 11 per cent. While the new season seemed to start earlier severe disruptions in recent weeks has contributed to the tighter supply.

As with throughputs there is considerable differences between old and new season lamb prices. In the first three months of the year prices remained buoyant and tracked above 2011 levels. This has resulted in the prices for old season lambs being comparable with 2011. Overall the OSL SQQ price was two pence higher than in 2011, at 201.8p per kg. With prices falling in the post Easter period new season values have consistently tracked below the exceptional levels recorded in 2011. At 203.2p per kg the average NSL SQQ price was 24 pence lower year on year.

Cattle Market Trends



Prices

As the market remained buoyant, in week ended 30 June the overall prime cattle deadweight average price strengthened almost two pence on the week to 340.5p per kg. The average price of all categories of cattle increased on the week with the price of R4L steers up two pence to 349.2p per kg while R4L heifers were three pence dearer at 348.7p per kg. At 334.5p per kg, the average price of R3 young bulls was up a penny on the week.

Cow prices have increased almost every week this year as numbers have been significantly down on the same period a year ago. However, in the latest week the overall cow price eased two pence to 271.4p per kg. Despite this, the shortage of cull cows is likely to continue for at least the next few months, which will result in strong demand continuing and prices remaining firm.

In the week ended 4 June the prime cattle average price at GB auction markets was little changed on the week at 191.8p per kg. The average steer price levelled at 192.9p per kg while heifers were also at a similar price to the week earlier at 196.9p per kg. Young bulls were almost a penny dearer at 185.1p per kg.

Consumption

According to the latest Kantar Worldpanel data in the 52-week period ending 10 June 2012 household purchases of fresh and frozen beef were at a similar level to the year earlier at 302,000 tonnes. In addition, the number of households buying beef remained at a similar level to those in the corresponding period a year earlier. Expenditure increased six per cent to £1.98 billion as a result of a similar increase in the average retail price. Sales of second quality stewing beef were six per cent up on the year while household purchases of mince were back two per cent.

In the 12-week period ending 10 June 2012, purchases declined five per cent on the year. Expenditure increased seven per cent to £440 million, as increased retail prices more than offset the lower household purchases. With the exception of second quality stewing beef, sales of all cuts were lower year on year. In the 12-week period household purchases of roasting joints performed worst, sales of first quality roasting joints were back 11 per cent whilst sales of second quality joints were 21 per cent lower on the year. Largely as a result of increased promotional activity sales of second quality stewing beef increased six per cent on the year and accounted for over 10 per cent of all beef purchases in the 12-week period.

Pig Market Trends



Prices

The seasonal rise in finished pig prices continued in week ended 30 June, with the EU-spec DAPP breaking through the 150 pence barrier, adding a further 0.32p to reach 150.31p per kg. There has been some tightening of supplies in recent weeks, with estimated GB clean pig slaughterings below the level for the equivalent week last year for the first time in nearly three months at 156,300 head. The average carcase weight fell by another 200 grams to 77.75kg. This is only slightly heavier than a year earlier, when weights were rising, suggesting that rising feed costs are starting to encourage earlier marketing of pigs.

Having fallen by more than three pounds in the last two months, the average 30kg weaner price was little changed at £42.32 per head in week ending 7 July. This is despite further increases in feed prices, with nearby futures wheat closing in over £200 per tonne at the end of the week.

Consumption

Household expenditure on fresh and frozen pork increased by five per cent in the 12 weeks to 10 June 2012, with £217 million spent on pork. Nevertheless, the quantity of pork purchased declined by three per cent. The decline has been driven by reduced purchases of leg and shoulder roasting joints, recording falls of 18 per cent and 14 per cent respectively. Changes in promotional activity had a heavy influence on these trends. In the latest 12 weeks, 13 per cent of pork shoulder was sold on promotion, considerably lower than last year’s figure of 28 per cent. There was also lower promotional activity on pork leg joints. The strongest increase in purchases came from pork loin roasting joints, with a 46 per cent year-on-year increase.

In the latest 12-week period, the amount of bacon purchased was two per cent higher than a year earlier while expenditure was up by four per cent. Rashers were the main driver behind the increase in volume purchases, although chops recorded the strongest year-on-year increase, up by 74 per cent albeit from a smaller base.

Pork sausages recorded a four per cent year-on-year increase in purchases in the latest 4-week period. Purchases of sliced cooked meats were also higher than a year earlier, rising by three per cent. Other popular picnic items such as sausage rolls (up seven per cent) and pork pies (up five per cent) also recorded strong increases in volume purchases, benefiting from the Jubilee holiday period at the start of June. Nevertheless, disappointing weather conditions have meant that, over the full 12-week period, purchases of all these processed products were lower than a year earlier.

Sheep Market Trends



Prices

Following the recent uplift deadweight lamb prices eased in week ended 30 June. At 429.3p per kg the latest GB DW SQQ fell over five pence on the week. This modest decline has kept the SQQ ahead of 2011 levels for a second consecutive week and represents a 66 pence increase on the SQQ in the corresponding week in 2010. In week ended 4 July the liveweight trade at GB auction markets eased. At 182.3p per kg the latest GB SQQ was down 14 pence of the week.

Given the dominance of the UK in relation to EU heavy lamb production it is hardly surprising that the EU reference prices has closely followed the UK reference price in recent weeks. Having rebounded in recent weeks, reaching a high of €5.31 in week ended 24 June. The French price has gone against recent trends and declined steadily while the heavy lamb price in Spain and the Netherlands have both shown some resilience in recent weeks. The German price has mirrored the French price and recorded a steady decline.

Consumption

According to the latest Kantar Worldpanel data in the 12-week period to 10 June 2012 purchases of fresh and frozen lamb increased nine per cent. This was largely influenced by the strong performance of leg and shoulder roasting joints over the Easter period. Purchases of shoulder roasting joints recorded a 13 per cent increase on the year, while sales of leg roasting joints were up 41 per cent. Together these two cuts accounted for almost 60 per cent of all lamb purchases compared with 47 per cent in the corresponding period last year. There has been increased promotional activity on lamb with 39 per cent sold on promotion over the past 12 weeks compared with 26 per cent last year.

In the 12-week period household expenditure on lamb continued to grow, increasing seven per cent on the year to £157 million. This was entirely the result of the increased volume purchased as the increased price promotions resulted in the average price of lamb declining on the year. Despite increased volumes being purchased, market penetration was lower than in the corresponding period a year ago, 37 per cent of households purchased lamb in the 12-week period compared with 41 per cent in the corresponding period of 2011. However, in the four week period to 10 June, further reflecting the increased promotional activity, the number of households purchasing lamb was at a similar level to the year earlier.

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