UK Pig Meat Market Update

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The November edition of our monthly UK Pig Meat Market Update is now available, providing the latest on prices, production, international trade, consumption and the feed market.

For previous editions of the market update please scroll to the bottom of the page where you can download PDF versions.

November 2018

UK PRICES

GB pig prices continued to ease back in September with the EU-spec APP averaging 151.18/kg, 1.02p lower than the previous month. The monthly price was around 14p lower than in the same month last year. Prices continued to fall in early October, with the APP for week ended 20 October standing at 148.92p/kg.

The market has is generally well-balanced overall, with prices remaining somewhat rangebound over the past few months, although any typical pick-up in demand following the school holidays hasn’t been felt strongly. Supplies continue above year earlier levels, both in the UK and on the continent, while both domestic and export demand have been broadly stable. However, the exchange rate remains favourable, which has likely helped keep prices at reasonable levels.

The EU-spec SPP followed a similar trend, falling by 1.16p between August and September to 147.68p/kg. The gap between the two series increased to 3.50p. October recorded further price falls, with the SPP averaging 145.17p/kg in the week ending 27 October.

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The weaner market has also continued to decline, with prices remaining well below year earlier levels. The monthly average prices for both 7kg and 30kg pigs both fell in September. At £36.14/head, 7kg weaners sold for around £7.60/head less than in September 2017, although the annual decline was slightly less for the 30kg average, standing £6.20 lower at £52.85/head.

The average carcase weights increased in September compared to August, although they remain below weight in September last year. In the APP sample increased by 590g compared to August, at 83.03kg, and was around three quarters of a kilo lighter than in the same month last year. Carcase weights were unusually high between August and October last year, reflecting some delays to marketings at this time. Weights have remained below year earlier levels into September, suggesting fewer pigs are being rolled than last autumn. This may indicate more closely aligned supply and demand than last year, and reports indicate fewer plant breakdowns. Into October, weights increased in line with the unusual seasonal pattern.

EU PRICES

The EU average pig price declined over the past four weeks, driven by falls in all but a handful of countries. At €136.45/100kg, the latest price for week ended 28 October stands €5.42 below four weeks ago, and the discount on 2017 prices stands at €12.84/100kg.

In Germany, the price declined by €4.38 over the four week period, to €140.32/100kg in the latest week. Poland and the Netherlands also recorded decreases, to €131.34/100kg and €121.21/100kg respectively. In Spain prices fell by €11.66 to €132.91/100kg, while France and Denmark also recorded declines overall. After the initial price impact in Belgium following the recent outbreak of African Swine Fever in wild boar, pig prices in Belgium have continued to fall, but at a slower rate, only €2.20 over the past four weeks to stand at €104.00/100kg, the lowest figure since March 2016. Reports indicate the slaughter of Belgian pigs in the Netherlands and Germany has at least partly ceased, which may make now it difficult to market all the available Belgian slaughter pigs.

UK prices have remained more resilient and actually rose in euro terms, by €0.61 in the four weeks to 28 October, to €164.77/100kg reflecting the continuing strengthening of the pound, as the City begins to feel more confident of a negotiated Brexit deal. This means the premium received by British producers has increased to over €28/100kg in the latest week.

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Reports suggest supplies are picking in in Europe, with rising numbers of slaughter pigs and increasing carcase weights. Without a concurrent increase in pig meat demand, prices have begun to fall. The proximity of the ASF outbreak to other key EU pig producers is also a concern, and neighbouring processors are reportedly reluctant to build up stocks in case of further spread. As such, demand for frozen pork may decline, which could further affect EU pig prices.

UK SLAUGHTERINGS AND PIG MEAT SUPPLIES

UK pig meat production totalled 72,900 tonnes in September, a 5% decrease compared to the same month a year earlier. This is the largest decline recorded since April 2017. However, note there was one less week day in September this year, and on a like-for like basis, production would be stable compared to last year.

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The total number of clean pigs slaughtered in the UK also recorded a decline of 3% year-on-year, to 843,500 head. Again though, on a like for like basis this would be a 2% increase. The different regions of the UK recorded diverging trends. England and Wales recorded a decline of 5%, while Scotland’s clean pig slaughterings were four times higher than at the same time last year, when a key plant was forced to close. Northern Ireland, which had picked up some of the Scottish slaughter last year, recorded the largest decline in slaughterings, of 8% year-on-year.

Overall therefore, in the first nine months of the year the number of clean pigs killed was 3% higher than in 2017, at 7.9 million head. UK pig meat production was up 4% at 687,300 tonnes, meaning carcase weights have generally been higher so far in 2018. However, in September alone, average carcase weights fell 1.7kg year-on-year, to 82.9kg. This reflects both poor growth rates during the summer, and unusually high carcase weights this time last year as more pigs were rolled.

Sow and boar slaughterings in September recorded a 3% increase compared to the month in 2017, at 21,000 head. Cullings have been above year earlier levels every month this year, except in June. While the higher slaughterings may be due to lower profitability for producers this year, it is perhaps more likely there is a higher replacement rate this year due to an older age profile in the UK breeding herd. In January-September 2017, sow slaughter declined 11% on year earlier levels; in the same period this year throughputs have increased 10% again to 195,300 head.

UK imports of pig meat declined in August, while exports increased compared with a year earlier, according to the latest figures from HMRC.

Fresh/frozen pork imports were reportedly 9% lower than in August 2017, at just under 35,500 tonnes. This follows two months when imports had been much higher, though is in line with the overall trend for the year so far, which shows pork imports have been 7% below last year. EU pig prices were rising in August, reducing the price competitiveness of EU product compared to British pork, which may have helped deter import levels. The average price of pork that was imported was 11% lower than a year earlier, meaning the value of UK pork imports fell 19% to £66.5 million.

Only Ireland and Poland bucked the overall trend and sent noticeably more pork to the UK during the month. Shipments from the Netherlands recorded a particularly strong decline of nearly 50%, while volumes from France were down over 40% year-on-year. An 8% drop in imports from Denmark, the UK’s largest pork supplier, was also recorded.

More recently, EU pig prices have dropped back sharply, with pork from Belgium particularly cheap due to the discovery of African Swine Fever. This could mean import pressure has been higher again in recent weeks.

It was a similar picture for processed ham imports, with both volume and value falling on August 2017. On the other hand, bacon imports were higher during the month, up 17% year-on-year. Lower Dutch shipments were offset by higher volumes from most other suppliers. The value of this trade was still 10% lower though, at £40.4 million. Sausage shipments were also slightly higher than year earlier levels, thanks to strong shipments from Ireland and Poland.

After a weaker few months, UK pork exports were 1% up on the year in August, at 18,200 tonnes. Rising EU pig prices at the time may have helped boost sales to Europe, with volumes also up 1% on the same month last year. Growth was recorded to Germany and the Netherlands in particular. Exports to the US were also well above August 2017, although trade outside of the EU was stable overall due to lower shipments to China. While average pork export prices were lower than last year, the fall was not as great as for imports, so export value was only down 4% at £23.1 million.

Exports of bacon and sausages, while being much smaller in volume, were much higher in August. Offal exports also rose strongly, with growth from both EU and non-EU markets. There was notable growth in volumes to China of nearly 40% year-on-year, and trade with Hong-Kong also increased modestly. The US is traditionally the largest offal supplier to China, but with prohibitive tariffs now in place, other suppliers have been able to gain market share.

FEED MARKET

Grains

  • Uncertainty over delays in Russian exports bolstered global wheat futures during the first half of the month, although this effect weakened as the month progressed. Increasing downward pressure from maize markets contributed to falling wheat prices, alongside lagging export sales of wheat from the EU and US.
  • Total grain availability was revised up in the latest IGC estimates (27 September), driven by increased maize production in the US, EU and Ukraine. While US production was scaled back 1.3Mt towards the end of the month due to reduced yield expectations, maize stocks held by other major exporters (Argentina, Brazil and South Africa) were revised up. Increased global supply will add pressure to world grain markets, and will be watched closely.
  • At an EU-28 level, soft wheat exports continued to fall over the last four weeks, following the strengthening euro against the US dollar. Exports for the week ending 14 October were the lowest so far this season, with just 100Kt of wheat shipped. The current close correlation of Paris and UK futures in both euro and sterling terms means that the future pace of EU exports is likely to affect the value of UK wheat.
  • Domestically, production of all major cereals (wheat, barley and oats) fell in 2018-19, with wheat and barley production falling 5% and 8% respectively since last year. Additionally, oat production decreased by 2%, with oilseed rape production falling by 5% on last year. Consequentially, the UK wheat supply and demand balance is now forecasted to be 20% below last year, despite a slight decrease in domestic wheat consumption.
  • AHDB usage data revealed that the amount of cereals used to produce GB animal feed in August 2018 increased to an all-time high for the month, reflecting the record amount of compound and integrated poultry unit (IPU) feed produced in August 2018. Ruminant demand for compound feed is also up 15% on the year, likely reflecting forage production issues this season.

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Proteins

  • At the start of the month, European markets were supported by a combination of tightness of EU supply, strengthening of the US dollar against the euro and increased biodiesel demand. Estimates for the 2018-19 EU rapeseed production were both increased this month by the EU Commission and Strategie Grains, to 19.7Mt and 19.9Mt, respectively. However, European markets may continue to be supported due to prolonged dry weather causing concern over establishment and performance of next year’s crop.
  • Across the pond, North American weather has also been a market supporter this month, with heavy rain delaying the Midwest US soyabean harvest and snow slowing the Canadian canola (rapeseed) harvest.

  • US prices were depressed towards the end of the month due to an increase in forecasted global oilseed ending stocks (USDA), and sluggish US soyabean exports potentially contributing to higher global soyabean supplies.

  • Moving forward, planting of next season’s soyabean crop is well underway in Brazil, with 16% more planted than average for this time of year. Brazil is a top global exporter of soyabeans, and the USDA forecasts the country will produce a record crop in 2018-19.

  • On the domestic front, Defra has estimated UK rapeseed production in 2018 to be 5% below last year’s figure, at 2.05Mt. This comes despite an increase in the UK rapeseed planted area. Scottish rapeseed production in 2018 has been provisionally estimated at 125Kt (13% below last year) by the Scottish Government, affected by the difficult weather faced by growers this season

CONSUMPTION

The latest retail data for GB has now been released and the 12 week trend has changed little since the previous update. During the 12 weeks ending 7 October beef burgers and sausages continued to sell well, according to the latest data from Kantar Worldpanel.

Fresh and frozen pork retail sales have also come under pressure recently, with volume down by 3% and value down by just over 4%. Retail sales of bacon remained steady in volume, although recording a 3% decline in value. Again following recent trends, the volume of sausages sold was up 3%, and also recorded a small rise in average retail price. Total pig meat* sales during the period recorded a slight increase however, while value remained steady.

*encompasses primary, bacon, sausages, sliced cooked meats, chilled main meal accompaniments, ready to cook, pulled pork, pork ribs and burgers and grills.

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This pig meat sector UK market update was prepared by:

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Rebecca Oborne, Bethan Wilkins & Duncan Wyatt
AHDB Market Intelligence

Phone: +44 (0)24 7647 8631/8757/8856

e-mail: Rebecca.Oborne@ahdb.org.uk, Bethan.Wilkins@ahdb.org.ukDuncan.Wyatt@ahdb.org.uk  

Twitter: @AHDB_Pork #PorkMarketNews

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