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AHDB European Market Survey

27 July 2012

AHDB European Market Survey - 13 July 2012AHDB European Market Survey - 13 July 2012

This is the last European Market Survey after more than 2,000 editions and 40 years of coverage of the European and global livestock and meat scene.


End of the European Market Survey

The publication first started in 1972, originally under the auspices of the Meat and Livestock Commission (MLC), consisting of only two pages. It was intended to give readers a better knowledge and understanding of the European scene before the UK acceded to the EEC at the beginning of 1973.

The 1972 publication was already monitoring livestock prices and marketings in the six member states of the EEC; a feature that has continued through to the present day. Prices in other countries were inevitably quoted in national currencies and so converted to sterling and also to Imperial units. In the case of pigs, prices were converted to pounds sterling per score liveweight!

One of the first areas covered was the French import duty on UK sheep meat. This was to provide some protection to the French lamb industry given the lower market prices in the UK. The import duty was set each week and varied depending on the level of French prices. Import licences were even suspended if the French price fell below a certain level. At least entry of the UK to the EEC/EU gradually resulted in free trade between the two countries but this still took almost 20 years!!

On entry to the EEC, the European Market Survey content was expanded to include tariffs on trade including Monetary Compensatory Amounts (MCAs). The UK meat industry was totally dependent upon the complicated calculations made by MLC as there was a delay before the MCAs were published by the European Commission. The MCAs could be refunds on exports for countries with a strong currency or charges on imports for those counties with weak currencies. This was made necessary by the fact that intervention prices were set in European Currency Units (ECUs) and converted into national currencies given that each member state had its own fluctuating currency.

Before the UK joined the EEC there were only six Member States, namely Belgium, France, Italy, Luxembourg, the Netherlands and West Germany, so the amount of market intelligence and data published was considerably lower than for the 27 Member States of today. The adoption of the euro in on 1 January 1999 also simplified the data requirements covering prices. The introduction of the Single Market from 1 January 1993 simplified trade arrangements between Member States with the dismantlement of the MCA system and also clawback (export tax) that still applied to UK sheep meat exports.

Start of new weekly publications

From next week, the European Market Survey and its sister publication the UK Market Survey will be replaced by two new publications, Cattle and Sheep Weekly and Pig Market Weekly. Following feedback from levy payers, these publications will be shorter and more accessible. The monthly Pig Market Trends will continue and there will also be a new monthly Cattle and Sheep Market Update.

Cattle and Sheep Weekly will be a two-page publication, with one page each for the cattle and sheep markets, and will be published every Friday. It will provide key market indicators, a commentary on prices and short articles on other topical market issues or data releases, including slaughterings, trade, consumption and census data. More in depth analysis of these and other market issues, including full coverage of international markets, will be provided in the monthly Cattle and Sheep Market Update, the first edition of which will be published at the end of the month.

Pig Market Weekly will be an e-mail newsletter, published on Thursday mornings. It will provide key market indicators along with articles on topical market issues, covering the UK, EU and global markets. Pig Market Trends will continue to provide more detailed analysis of the market on a monthly basis.

One consequence of moving to shorter publications is that they won’t have space to include the wide range of data which have previously been published in the UK & European Market Surveys. Therefore, most of the data from the two publications are now available through the BPEX and EBLEX websites:

Both of the new weekly publications will be available free of charge and all existing subscribers will automatically receive them both unless they inform us beforehand. The monthly publications will also be available free of charge to e-mail subscribers and previous subscribers to Cattle Market Outlook or Sheep Market Outlook will automatically receive Cattle & Sheep Market Update. If you no longer want to receive one or more of the publications or would like to subscribe to additional ones, please contact Emma Whitlock ([email protected]).

EU weaner prices fall back from record high

Prices for weaners in the EU have remained at a high level throughout the first half of 2012, with the average price reaching a peak of nearly €52 per head in mid April. This was the highest level recorded since the expansion of the EU in 2004. More recently, the average price has fallen back to €43 per head in week ended 8 July. However, this price is still more than six euros higher than a year earlier, representing a slight narrowing of the gap which has been around nine euros for most of the year.

The EU average weaner price typically rises during the early part of the year, peaking in the spring before falling back through the summer and autumn. This pattern largely reflects the usual seasonal trend for finished pig prices, which typically peak in the summer, when spring-sold weaners would be ready for slaughter. So far this year, the average weaner price has followed this seasonal pattern but prices have been at a higher level than in recent years. The seasonal fall has recently been accelerated by the high and rising level of feed prices which are impacting on the profitability of finishers and limiting the number of pigs they are willing to take on and the price that they are prepared to pay.

This year’s higher prices largely reflect increased demand for weaners, since data from the December 2011 pig census suggest that the supply is not significantly different from previous years; the number of piglets with weights under 20kg was virtually unchanged from the previous year. Poor profitability in recent years has meant that many producers, particularly in Eastern Europe, have stopped breeding pigs. However, some of these producers have switched to finishing instead, leading to increased demand for weaners from the remaining breeders. For example, in 2011, Poland imported 2.2 million weaners, 14 per cent more than the previous year. In the first quarter of this year, Polish weaner imports were up by almost a third year on year.

Weaner prices in most Member States followed the same general trend as the EU average. Germany is the largest market for weaners, importing over 8 million head annually to supplement the output from the largest breeding herd. Its average price, among the highest in the EU, reached a record level of €62.50 in April but has since fallen back by over €11 per head. Nevertheless, the latest price is still more than six euros higher than a year earlier. Prices in many neighbouring countries followed a similar trend, given their close links to the German market.

Denmark is the largest exporter of weaners in the EU, shipping 8.4 million head last year up nine per cent on 2010 with further growth so far this year. Here prices have followed a slightly different trend, falling around the turn of the year and then increasing slowly but steadily. Prices have continued to rise after they began to fall elsewhere, reaching DKK339 (€45.58) by week ended 8 July. This is about 11 per cent higher than a year earlier, a smaller rise than in most other Member States.

French beef exports lower

According to data from Eurostat, cattle numbers in France in November 2011 were down three per cent on the previous year. As a result of the fewer cattle on farm, slaughterings in the first five months of 2012 were over four per cent back on year earlier levels at 2.08 million head, with production back over five per cent to total 627,000 tonnes.

This fall in production has had an impact on the French beef export trade. Beef and veal exports in the year to April were over 20 per cent lower than in the corresponding period a year ago. Trade with Italy and Greece, France’s largest export markets suffered, in part as a result of the difficult ongoing economic situation in both countries. Shipments were back eight and 14 per cent respectively on the year. In addition, exports to Germany declined over 15 per cent. As a result of the increase in trade tariffs in Turkey, beef and veal shipments were negligible, which is contrary to the corresponding period last year when they accounted for 11 per cent of all French beef and veal exports.

Total French imports of beef and veal in January to April, were one per cent down on the year. Imports from the Netherlands and Belgium fell by 12 and 10 per cent respectively, but much of this comprised of veal, which suffered from weak consumer demand. Shipments from Germany were virtually unchanged on the year while those from Ireland increased almost nine per cent, despite lower production.

Exports of live cattle in January to April declined five per cent on the year; shipments to Italy and Spain, which together accounted for almost 90 per cent of all live exports, were back four and eight per cent respectively. Shipments of live cattle to Turkey commenced in September 2011 and in the first four months of this year totalled 26,600 head. This subsequently had an impact on the trade flow of live cattle to the Lebanon which were a third of what they were in the corresponding period in 2011.

Growth in US pig herd slowing

According to the latest figures from the US Department of Agriculture (USDA), the United States pig herd in June 2012 was up by one per cent compared to June 2011, reaching 65.8 million. Following similar trends, increases were recorded for most weight bands of pigs intended for slaughter, with the exception of the heaviest pigs and the lightest pigs which were only up marginally.

Breeding pig numbers stood at 5.9 million head, one per cent higher than both the previous quarter and a year earlier. This suggests a slowing of the expansion of the US herd as there is increased uncertainty about profitability. Pig prices have eased back from the record highs last year, while feed costs have been increasing. This means that producers will struggle to turn a profit this year, in contrast to 2011, which in turn has dampened future plans for growth until production costs are stable and the outlook for the pig market becomes more certain.

The number of sows farrowing during the March to May quarter totaled 2.92 million head, marginally higher than the same quarter last year. Productivity gains continued as the number of pigs weaned per litter reached a record high for that quarter of 10.09, compared with 10.03 last year. Consequently, the pig crop was one per cent higher than the previous year at 29.4 million head. However, there is a large gap in productivity when taking into account the operation size, as the smaller producers, with fewer than 100 sows, weaned only 7.50 per litter whereas the larger producers, with more than 5,000 sows, weaned 10.20 per litter. Compared to last year, intended farrowing numbers in the June to August quarter are down one per cent to 2.90 million. Intended farrowings for the following quarter are also down by one per cent. The actual fall in farrowings could be even larger given the big jump in the corn prices in recent weeks, since the survey was carried out, which will further add to the rising production costs.

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