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AHDB Pork UK Pig Meat Market Update

01 August 2012

BPEX UK Pig Meat Market Update - August 2012BPEX UK Pig Meat Market Update - August 2012

Finished pig prices increased only slowly during June, with the monthly average EU-spec DAPP less than a penny higher than in May at 149.79p per kg.
British Pig Executive Monthly UK Pig Meat Market Update

The slow rise in prices continued during the first half of July with the DAPP reaching 150.62p per kg in week ended 21 July. Broadly stable prices are typical at the time of year, although prices have been somewhat subdued by a combination of the weak euro, wet weather and relatively plentiful supplies of pigs. As a result, prices have generally been around two pence lower than their levels a year earlier.

Carcase weights have fallen steadily since the start of May. This is partly seasonal although weights typically begin to rise again during June but that has not been apparent this year. One reason is high feed costs encouraging producers to market pigs earlier. The average carcase weight in June was 77.9kg, about half a kilo lower than in May but slightly higher than in June 2011. In early July, weights have fallen below year earlier levels.

Following a peak of almost £46 per head in April, weaner prices have fallen sharply. The average price for June was £42.95 per head, £1.50 lower than the previous month and about three pounds lower than in June 2011. Since then the price has continued to fall, reaching little over £40 per head in week ending 28 July. Initially the fall was the result of the supply of weaners outstripping the number of places available. More recently, rapidly rising feed costs have further reduced the price which finishers are prepared to pay, especially as finished pig prices tend to fall during the second half of the year.

Cull sow prices have also fallen steadily since the spring. The weakening euro has been a key factor, with the majority of British sow meat destined for export. Falling prices on key export markets, driven by subdued consumer demand, have also played a part. The average price during June was 115.47p per kg dw, over a penny lower than the previous month but still over 18p higher than a year earlier. The price fall has accelerated in July with the average price dropping to 108.17p per kg in week ended 21 July.

EU Prices

The EU average pig price during June was €167.83 per 100kg, around five euros higher than in May and over €12 than a year earlier. However, the rising trend wasn’t universal with prices in many northern Member States, such as Germany and the Netherlands, little changed on the month as consumer demand was reduced by the poor weather limiting barbecue opportunities. In contrast, prices in southern Europe rose significantly, driven by a combination of higher demand for the upcoming tourist season and tighter supplies, partly due to lighter carcase weights.

Since the start of July, prices have been stable across most of Europe. The largest movements have been seen in Italy, where prices have risen by €15 per 100kg in the three weeks ending 22 July. In contrast, prices in Germany and the Netherlands have fallen by two and three per cent respectively over the same period.

Following a period of stablity during May and June, the euro weakened significantly in the first half of July. This meant that, in sterling terms, EU pig prices fell back, widening the gap between EU and UK prices from around 10p per kg in mid June to 15p a month later.

As in the UK, weaner prices in the EU have fallen back from a peak in April as higher feed prices have limited demand from finishers. At that point the average price was close to €52 per head. By June, the average price had fallen to just under €47 and by week ended 22 July it was under €43 per head. Nevertheless, this price is still nearly seven euros higher than it was a year earlier. The sharpest falls were in Germany and the Netherlands, where finished pig prices were declining. In contrast, Danish weaner prices continued rising during June and were stable through early July.

Cull sow prices in the key northern Member States fell during June and early July, following developments in the clean pig market. The German M1 sow average fell by five cents to €1.39 per kg, although this was still more than 20 cents higher than last June. By mid July the price had fallen to €1.34. Danish and Dutch average sow prices were both down by four cents to €1.06 and €1.24 respectively.

UK Slaughterings and Pig Meat Supplies

Following their normal seasonal trend, UK clean pig slaughterings declined slightly in June, totalling 741,000 head, marginally higher than in June 2011. As in most recent months, Scotland recorded an increase in slaughterings, up by eight per cent to 49,000 head. Slaughtering numbers for Northern Ireland were six per cent down compared to last year, whereas numbers in England and Wales were up one per cent.

The total number of clean pigs slaughtered in the first half of the year was up three per cent to 5 million head. Scotland led the way with a seven per cent increase, while Northern Irish throughputs were up less than one per cent.

Slaughtering of sows and adult boars during June 2012 totalled 19,000 head, virtually the same as AHDB estimates for June 2011. Almost all of these were in England. Altogether, adult pig slaughtering numbers were up by just over three per cent year on year in the first six months of 2012 at 128,000 head.

Average clean pig carcase weights in June were about half a kilogramme higher than a year earlier at 78.0kg. The average carcase weight for sows and boars was 153.8kg, three per cent higher than a year earlier. As a result of the higher carcase weights, total pig meat production in June was up by one per cent on last June at 60,700 tonnes. Production in the first half of the year was up three per cent on the same period of 2011 at 404,400 tonnes.

In May 2012, both imports and exports of pork and bacon were lower than in May 2011. This was partly offset by higher imports of processed pig meat products and higher exports of pig offal.

Imports of both fresh and frozen pork and bacon have been subdued throughout 2012. Pork imports in the first five months of the year were down 11 per cent on the same period last year while bacon imports were down 10 per cent. A similar pattern was seen in May, with pork imports down by 15 per cent and bacon by nine per cent. Most major suppliers were affected but, as in previous months, pork imports from Germany, France and Spain were higher. The weakening euro meant that sterling unit prices for pork were four per cent lower than a year earlier, so the value of imports fell by 18 per cent.

There was a particularly sharp fall in imports of fresh bone-in hams, down by nearly half, and loins. Processed products fared better, with May sausage imports six per cent higher than a year earlier and other processed shipments up by 45 per cent, notably from Ireland where production has been high so far this year.

May exports of fresh and frozen pork from the UK were four per cent lower than a year earlier. This was partly due to a 23 per cent fall in shipments to Ireland, given the higher supplies available there. Among countries recording significantly increased shipments were the Netherlands, Sweden, the US, Italy and Cyprus. There was also a 21 per cent fall in exports of carcases and half-carcases to Germany, Belgium and the Netherlands, a trade which is largely made up of cull sows. Bacon exports were down very sharply, being only around a quarter of their level in May 2011, with all major markets affected. However, offal exports remained strong, up by more than a third on year earlier levels. Trade with other EU Member States, notably the Netherlands and France, was the main driver.

Despite May’s fall, fresh and frozen pork exports for the first five months of the year were up by five per cent with Germany the only major market taking lower quantities. Offal and processed exports were also up, although bacon shipments were down by 29 per cent.

Feed Prices

Global grain prices have been forced higher through July, largely driven by deepening drought conditions in the US Corn Belt. On Friday 27 July, November 2012 feed wheat futures closed at £187.70 per tonne, up by £20 over the last month. A week earlier, the November 2012 daily closing price had reached £194.50 per tonne, the highest level since the contract opened in July 2010.

During July, the main driver of feed grain prices has been the developing US drought, which has had negative impacts upon the US maize crop, which is in the critical yield forming phase. By 22 July, the USDA rated just 26 per cent of the US maize crop as being in good or excellent condition. This is five percentage points below the previous week and 46 points down on the end of May, when crops were benefiting from a favourable spring. Rain has arrived in areas of the Corn Belt, but is unlikely to revive crops, although it should help to halt the decline in crop conditions.

Two main factors will determine the size of the US maize crop – crop yield and the rate of crop abandonment. The current USDA forecast estimates the US maize crop at 329 million tonnes, which is based on an abandonment rate of 7.8 per cent. However, historical data suggests that in extreme seasons the rate of abandonment can be as high as 14 per cent. Last week, the International Grains Council cut their forecast of the US maize crop to 300 million tonnes. Many analysts and commentators expect the USDA to cut forecasts for both yield and harvest area in the coming weeks.

Wet conditions within Europe have raised concerns over the quality and harvest of grains although dry weather is now allowing the French harvest to progress. Rainfall has thus far prevented the German barley harvest but EU barley prospects are generally considered to be good although weather will be the determining factor. Dry conditions forecast for Ukraine should allow harvest to speed up with 72 per cent completed at 20 July; yields so far are lower at 2.2 tonnes per hectare (2.89 in 2011) but quality is reportedly good.

In the UK, the arrival of warm and dry conditions in late July has helped ease some concern over grain crops. However, the cool and wet start to the summer has delayed harvest with ADAS suggesting at least a seven to ten day delay compared to normal. Yield prospects are highly uncertain with low sunshine levels and high disease pressure big drivers. The winter barley harvest is underway, with limited information so far on yields. However, due to the wet growing season, straw yields are seen as high.

As with the grains, soya values have been driven by the onset of the US drought. On Friday 27 July, hi-pro soyameal prices on the east coast were £429 per tonne, up from £366 per tonne a month earlier but down on levels seen earlier in July. The recent arrival of rain in the US Corn Belt is more beneficial to soyabeans than it is to maize with the oilseed crop just entering the key yield forming period. Nevertheless, the latest USDA report rated just 31 per cent of the crop as in good or excellent condition, half the level at this time last year.


AHDB estimates for the full cost of producing pigs have been revised to take account of recent improvements in physical performance. The effect of this, and some other adjustments to the calculations, is to reduce estimated costs somewhat. The new estimated cost of production for June is 158p per carcase kilogramme. This is around nine pence higher than the monthly average DAPP, equivalent to a loss of £7 per pig.

With feed prices rising rapidly, the cost of production for July is estimated at 162p per kg, over 11p above the DAPP. This means an average loss of around £9 per pig. Further rises in costs of production can be expected in the short term as feed prices have continued to increase and it takes some time for the full impact to feed through into animal feed prices.


The total grocery market rose 4.8 per cent in the four weeks to 10 June, with the Queens’s Jubilee providing the main boost to the grocery market. This compares to a 0.3 per cent year-on-year increase for the four weeks ending 13th May. The Jubilee celebrations created the second biggest incremental week of the year behind only Christmas, with an additional £202 million spent during the Jubilee week compared to the same week last year.

The growth rate for lamb over the Jubilee period was strong in comparison to beef and pork. However the growth was not as high as the volume uplift recorded over Easter. Purchases of pork were down during the Jubilee period, although this was compared with a period of strong sales last year. The Royal Wedding/Easter celebration period in 2011 did bring positive sales growth for pork but purchases declined around other recent holiday events.

For other meat products, the party/snacking theme appears to have resonated with consumers. This can be seen in the volume uplift of products such as sausage rolls (up six per cent), pork pies (up eight per cent) and burgers/grills (up 13 per cent). The strong performance in party/snacking items was also seen through other product categories. The wet weather over the Jubilee period compared to the warm weather for last year’s royal wedding meant that outdoor parties and barbecues turned more into indoor events. However, the grocery market trends highlight that consumers persevered with plans to celebrate this notable occasion.

Looking across the whole 12-week period up to 8 July, which included the Jubilee, the amount of pig meat purchased was lower than a year earlier, although that partly reflects strong sales last year. Purchases of fresh and frozen pork were down by two per cent while sales of sausages and sliced cooked meat were also lower. Bacon purchases were marginally higher than a year earlier. Purchases of loin roasting joints increased by 50 per cent at the expense of leg roasting joints, which were down by 30 per cent. Frying/grilling cuts also experienced falling sales. As well as sausages, picnic products such as pork pies and sausage rolls were purchased in lower quantities as the poor weather hit demand.

Despite the lower quantities purchased, expenditure on most categories of pig meat was higher than a year ago, due to increased prices. Spending on fresh and frozen pork rose by three per cent, bacon and sliced cooked meats by one per cent. However, expenditure on sausages was down by one per cent.

The pattern was similar in the latest 4-week period, with fresh and frozen pork purchases seven per cent lower than a year earlier and a two per cent drop in sausage sales, with other picnic products also down. Bacon and sliced cooked meats were both purchased in slightly higher quantities.

August 2012

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