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 2019

UK PRICES

In September, the EU-spec APP averaged 155.81p/kg, up for the sixth consecutive month although only 0.24p higher than August. This was also over 4.6p higher than the month last year. Despite a lack of strong demand in the UK market, elevated prices in the EU and ongoing demand from China added support to clean pig prices. This momentum carried into October, and in the week ended 19 October, the EU-spec APP stood at 158.60p/kg.

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The EU-spec SPP for September was 153.50p/kg, 0.23p higher than the previous month. This series has also shown continued strength, averaging 156.79p/kg in the week ending 26 October.

Carcase weights increased in September, with the average for the SPP sample at 84.16kg. Pigs are finishing at over 1.25kg heavier than in the same month last year.

The strength in finished pig prices also fed through to the weaner market, although the 7kg average picked up only 57p to £39.83/head in September. This is perhaps a reflection of producer optimism, continued pig price increases, and falling feed prices bring the prospect of improved margins. The 30kg weaner market bucked the trend. In September the market gave back August’s price increases to show a monthly fall of nearly £2 to £52.35/head. These more muted price moves may well be related to a reported lack of finishing space.

EU PRICES

In the week ended 27 October, EU pig prices continued to rise to a multi-year high at €182.92/100kg. This was only €2 higher than at the beginning of September.

European production has been lacklustre, particularly in Germany, Europe’s largest producer, which has helped support prices. Growth in Chinese demand now seems to have renewed vigour; Chinese pork carcase prices are the highest of the world major producers and in excess of £3/kg.

However, demand has been reported to be lower than expected across much of Europe, particularly the north. A paucity of pigs and weaker demand reportedly see processor margins caught in the middle. This may affect the sustainability of price rises. Companies with access to China are likely to be in a more favourable position.

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On average, UK pig prices have narrowed their discount to EU prices during October, to around €2/100kg lower in the latest week. Some weakening of sterling against the euro over the past month has influenced this. Over the past few years, UK prices have typically traded at a premium to EU prices, and might soon re-establish that pattern. If European prices remain strong, then the SPP would normally be expected to follow, but only at its own pace.

UK SLAUGHTERINGS AND PIG MEAT SUPPLIES

September figures published by Defra show a 5% annual increase in clean pig slaughter, reaching 887,100 head. Note that this increase is probably influenced by an extra working day in September this year.

A similar increase in slaughter was recorded for England and Wales and Northern Ireland. Slaughter in Scotland was 8% lower than a year earlier though, contrasting with strong the growth recorded across the previous few months. The rise in September meant total UK slaughter for the first nine months of this year was 1% above last year’s level, at 7.98 million head. Clean pig carcase weights in September reached 84.4kg, almost 2% (1.5kg) higher than a year before.

At 19,500 head, adult sow and boar throughput was down by 7% in September this year, compared with the same month in 2018. This continues the trend of recorded throughout this year. Last year’s cull numbers were relatively high, suggesting a younger breeding herd this year. Improving profitability, with feed prices falling while the pig price increases, has perhaps also encouraged producers to retain their breeding herd.

Altogether, pig meat production increased by 6% compared with September 2018. The total stood at 77,700 tonnes. This took pig meat output for the year to date to 702,000 tonnes, nearly 2% up on a year earlier.

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The UK’s pork export market has performed well for another month. In August, shipments of fresh/frozen pork were up 17% on the year, at 21,300 tonnes. Furthermore, average export prices were considerably higher (27%). As such, the overall export value of pork reached £34.4 million, nearly 50% more than last August.

Unsurprisingly, the growth was mainly driven by an increase in shipments to China. The outbreak of African Swine Fever continues to support demand for overseas product. In August, UK pork shipments to China were nearly double that of the previous year. Taiwan is also emerging as an important market for UK pork exports, having achieved access last year. Over 400 tonnes was shipped in August alone.

At 33,700 tonnes, UK imports of fresh/frozen pork in August were 7% lower than last year. Shipments from individual suppliers were mixed; imports from Denmark were down by over 15% (-1,900 tonnes) but Ireland and some smaller suppliers increased trade. Rising prices in the EU and a weaker sterling: euro exchange rate meant the average import prices were up by 16% on the year. Therefore, the total value of supplies was 8% higher than last year, at £73.3 million.

Imports increased earlier in the year, likely due to stockpiling ahead of the original March Brexit deadline. Though another Brexit deadline is just around the corner, it seems unlikely there will be a similar uplift in imports this time. Prices are much higher than at the start of the year, particularly in Europe. High prices on the Chinese market also mean this is an increasingly significant draw for European pork.

FEED MARKET

Grains

Grain prices have remained relatively steady in October as a stronger sterling pressured UK prices to remain competitive at a global level, due to the large need to export this season. Meanwhile, soyabean prices firmed on the back of weather led delays to both harvests in the US and new-crop sowing in Brazil.

The preliminary harvest figures for wheat and barley were released earlier this month by Defra. The first Defra crop production estimates have barley and wheat at 8.18Mt and 16.28Mt respectively. Opening stocks of wheat were 11.2% higher than last season, added to the bumper harvest, means availability of wheat is much greater this season. A greater supply of cereals on the market will keep domestic grain prices pressured, current grain prices are much lower going into winter than last year.

Throughout October so far, persistent bouts of rainfall have delayed maize and vegetable harvests. As of 22 October, monthly rainfall levels for England were 115% of the long term average for October. As such, the quality of delayed cut maize going into clamps could deteriorate if crop moisture levels were high at harvest.

Earlier this month, GB animal feed production statistics for August were published. Monthly production of feed was down 0.6% year-on-year for poultry to be at 511.4Kt. Ruminant feed production was down 13.4% and 41.4% year-on-year for cattle and sheep respectively, likely due to better pastures and silage stocks reducing manufactured feed demand.

Grain prices have mostly held over the month as the large domestic supply and increased sterling values have weighed on prices. An increasing need to export this season has meant grain prices have had to remain competitive with global markets. The latest corn returns (24 Oct) show UK ex-farm feed wheat (Oct delivery) has fallen £1.90/t since 3 Oct to be at £129.50/t. This decline has slightly filtered through to UK ex-farm feed barley (Oct delivery), which has fallen £0.80/t to £115.60/t over the same period.

July – August import volumes of maize have increased 53% this season to 437.61Kt against the same period last year, according to HMRC. Likewise, in August, whole and flaked maize usage in feed increased 15.3% to 39.9Kt. This is likely booked-in trade from the previous season where a greater volume of maize was imported to meet feed demand. Import levels of maize are unlikely to reach last season’s record levels due to the wider availability of cereal grains this season.

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Proteins

The outlook for domestic proteins continues to be tighter than for grains. Last season, pest damage reduced rapeseed production, both domestically and in the EU. This season, pest issues have again been reported, damaging crops post-emergence.

Despite this, UK rapeseed prices have seen pressure from record imports of Ukrainian rapeseed into the EU and the UK. However, this supply is expected to finish pre-January, after which, prices could be supported by the remaining large demand. UK imports of soymeal this season have totalled 577.3Kt so far, according to the EU commission. In the latest animal feed production figures, Soyameal usage was up 6.6% in the season to August, at 186.7Kt.

Soyabean markets still face a large global supply. A lack of resolution in US/China trade talks continues to overhang markets. However, US soyabean prices have been supported by weather led harvest delays in recent weeks.

For new crop prospects, soyabean sowings are behind average in Brazil amid lower than average rainfall levels affecting soil moistures.

CONSUMPTION

During the 12 weeks ending 6 October, GB retail sales of pig meat were down 3.8% in volume and 2% in value. Pig meat was not the only red meat to record declines, with sales of lamb down in volume, and beef volumes remaining stable.

Fresh and frozen primary pork sales decreased 1% year-on-year in volume, while value decreased 2.7%. The large categories of chops/steaks and shoulder joints recorded declines. In contrast, mince, leg joints and loin joints all recorded increases.

Bacon sales continued to decline, down 7.5% in volume, and 3.7% in value. Sausage sales didn’t sizzle, volumes were back 5%. Average sausage prices were up 2.3%, meant that value declined 2.8%. Sliced cooked pork volume sales declined 1.6%, although price increases meant the value increased very marginally

Fresh and frozen primary poultry sales bucked the trend compared to the red meats and recorded a 3.7% increase in volume, although at significantly lower average prices. Much of the rise is attributed to an increase in fresh chicken breast sales, with whole chicken sales down.

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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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