UK Pig Meat Market Update

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The July 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.

July 2019

UK PRICES

The EU-spec APP averaged 148.12p/kg in May, over 4p higher than in April. This was the largest increase at this time of year since the series began in 2014. With prices increasing more rapidly than normal this spring, the difference compared to last year fell to 3p/kg. The gap compared to year earlier levels has narrowed every month since last August, when it peaked at almost 16p/kg.

A rise in export demand coupled with reduced competition from imports, on the back of unusually high EU prices, has contributed to the rising market this year. Reports of subdued consumer demand, and lingering effects of Brexit stockpiling activity, have prevented prices rising more rapidly.

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The market remained on an upward trend into June, with the EU-spec APP reaching 151.58p/kg in the week ending 15 June. The SPP followed a similar upward trend, with the monthly average for May over 5.5p higher than in April at 144.80p/kg.

As has been the case throughout 2019, there was little movement in the 7kg weaner price during May and early June. Despite the rising finished pig market, high feed prices and a lack of fattening spaces have dampened the market. The average 7kg weaner price was £36.18/head in May, slightly higher than in April but generally similar to earlier months. Breeders were, on average, receiving £1.41 less for each weaner than a year ago. The 30kg weaner price seems to be strengthening. The average price in May stood at £49.00/head, nearly £3 higher than the month before. By week ended 15 June, the price had reached £50.74/head, the highest level since last October.

EU PRICES

In the week ended 16 June, EU pig prices reached the highest point since October 2013, at €178.15/100kg. This was nearly €3 higher than the start of the month. However, in the subsequent week, prices eased slightly.

Reports suggest the small supply of slaughter pigs has helped compensate for difficulties on the meat market. Demand is apparently below expectations across much of Northern Europe, although the onset of the holiday season is helping the situation in Spain and Italy. International trade is reportedly also somewhat mixed, though processors with access to the Chinese market remain in a more favourable position.

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On average, EU pig prices have moved further away from UK prices during June. EU prices averaged €9 higher than in the UK during the month. This is partly due to some weakening of the pound, which has taken around €1 off the UK price since mid-May.

UK SLAUGHTERINGS AND PIG MEAT SUPPLIES

UK pig meat production grew by 3.7% in May to total 80,100 tonnes. Production has been driven by an increase in clean pig slaughter and heavier carcase weights compared to a year earlier.

May 2019 Key facts:

  • Clean pig slaughter: 913,800 head
  • Adult pig slaughter: 21,700 head
  • Average prime pig carcase weight: 84.2kg.

Year to date (Jan-May) key facts:

  • Clean pig slaughter: 4.44 million head (+0.4% YoY)
  • Adult pig slaughter: 104,900 head (-4% YoY)

Pig meat production: 390,900 tonnes (+1% YoY)

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TRADE

UK exports of pig meat (excl. offal) increased by 14% (+2,700 tonnes) year on year in April 2019. Increased shipments have primarily gone to China and the Netherlands. China has taken more frozen pork while the Netherlands has increased fresh pork shipments.

The boost in exports during April has now brought exports for the year to date higher than for the same period of 2019. Frozen pork accounts for the largest volume increases during the period. However, all other categories have shown some growth year on year. Understandably, China is responsible for the majority of increases, as African Swine Fever drives import demand. This has offset some large declines in shipments to Denmark and Poland.

Offal exports have also recorded a sizeable increase in the first four months, again primarily to China. Exports of offal in the year to date are up 26% and total 33,000 tonnes.

Meanwhile, imports of pig meat (excl. offal) fell in April compared to the year earlier. Imports totalled 72,800 tonnes for the month, down 10%. A large share of these declines has come from Denmark and Germany.

FEED MARKET

Grains

The UK ex-farm price movement throughout the reported period differed considerably for UK feed wheat and UK feed barley. Both commodities saw a large drop in price on 23 May and UK feed barley has continued to climb back up since then. In contrast, UK feed wheat jumped back up from 23 May and took a tumble again in June, ending the period lower.

The GB animal feed production statistics (AHDB) released at the beginning of June, showed that for the month of April 2019, GB animal feed production was down across all sectors compared to April 2018; sheep (-36.4%), cattle and calves (-11.3%), poultry (-4.0%) and pigs (-1.7%).

While overall use is back, we see variability in this when split by feed type. Maize usage is over double that in April 2018, whereas wheat, barley and oats all saw a drop in use in April 2019, compared to April 2018. The price discount to maize would be a major driving factor at this time. However, the spread between new crop maize and wheat has been narrowing somewhat throughout June, which could see a switch from maize usage to wheat this year, increasing demand for domestic feed wheat for 2019/20. 

US weather remained a driver of global grain prices throughout May and June. The wet weather was not only causing issues with corn planting but also raised concerns around wheat conditions. As rains persisted, US Managed Money funds closed their net-short positions at a rapid rate for both corn and wheat throughout the reported period. This helped support Chicago grain futures.

Although dryness concerns were raised in June for Europe, the Black Sea region and Canada, so far they have not made any major effects on the market. All three regions, all key suppliers of global grains, are still set for bumper wheat crops for 2019 harvest. Prospects for maize production in the EU and the Black Sea also remain favourable. 

With grain availability prospects currently good for 2019/20, UK grain prices will likely remain pressured.  However, if dryness does become more prominent, grain prospects could be dampened potentially lifting prices.

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Proteins

UK rapeseed prices delivered into Erith peaked at the end of May to £325.50/t, but have since come down. As at 21 June, oilseed rape delivered into Erith was £323.50/t, reversing some of the losses seen during June, but not returning to end of May levels.

European (Paris) rapeseed futures have been following quite closely to US soyabean futures, rising and dropping at the same time. This said, more recently the European market has not been moving as dramatically as the US.  Both Paris rapeseed and US soyabean nearby futures ended the period up from the close of the last reporting period.

US Managed Money funds were in an all-time net-short position for soyabeans in May when planting concerns from wet weather became apparent. As money managers bought back contracts to close their short position, the futures market was pushed higher.

With EU oilseed rape crop prospects still subdued, the global market is driving European prices. The latest EU Commission balance sheet, released at the end of May, pegs the EU to be in a rapeseed deficit of over 3Mt. The overall oilseed deficit for the EU was pegged at over 16Mt. This shortfall, if realised, highlights how reliant the EU is going to be on imports of oilseeds this year and the importance of global supply.

Both rapemeal and soyameal usage for the season (July-April) are up compared to 2017/18. Rapemeal usage has seen the biggest increase - 12.6% to 549.5Kt. The imports of both these feed products are also up year on year to meet the increased demand.

CONSUMPTION

The value of pig meat* retail sales was down 5% in the year-on-year in the 12 weeks ending 19 May, according to the latest data from Kantar Worldpanel. Prices were on average 2% lower than last year, but the volume sold still fell by nearly 3%.

Fresh/frozen pork

Shoppers’ spending on fresh/frozen pork was down by 3%. Despite price cuts, the volume sold remained similar to last year.

The fall in sales was particularly driven by declining expenditure on chops/steaks. Lower prices for these cuts failed to stimulate volume sales, which also fell by over 3%. Fewer shoppers purchasing these products drove the decline, as the volume per buyer actually increased a little.

There was a similar picture across the fresh/frozen pork category. Overall, the volume per buyer actually increased, which compensated for falling shopper numbers.

One sector bucked the overall trend and performed well during the period. Shoulder roasting joints enjoyed volume growth of 17%, compared to a year ago.

Pork Sausages

Spending on sausages fell 7% over the latest period, compared to a year ago. This probably reflects poorer weather, discouraging barbeque occasions, this year. Although prices fell a little, most of the decline came from falling sales volumes.

Bacon

Expenditure on bacon was down 8% year on year, with a 7% drop in volume sales combining with a fall in average prices.

Pork sliced cooked meats (ham)

Shopper spend on ham was down 4%, again driven by both falling volume sales (-2%) and prices (-2%).

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This pig meat sector UK market update was prepared by:

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Felicity Rusk, Bethan Wilkins & Duncan Wyatt
AHDB Market Intelligence

Phone: +44 (0)24 7647 8818/8757/8856

e-mail: Felicity.Rusk@ahdb.org.uk, Bethan.Wilkins@ahdb.org.ukDuncan.Wyatt@ahdb.org.uk  

Twitter: @AHDB_Pork #PorkMarketNews

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