UK Pig Meat Market Update

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The May 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.

May 2017

UK PRICES

In March, GB pig prices returned to growth, with the monthly average EU-spec APP up by over a penny compared to February at 154.61p/kg. Week-on-week increases were initially modest, but picked up as the month progressed. For the first three weeks of April, price increases have become even stronger, with the APP reaching 158.16p/kg for week ended 15 April. This was the highest weekly figure since October 2014. With the tight supply situation showing no signs of easing, price support is likely to remain strong in the coming weeks.

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The SPP followed a similar trend to the APP in March, but showed a more modest increase (+0.81) month on month, standing at 151.53p/kg. The gap between the APP and the SPP narrowed compared to the previous month, residing at 3.08p/kg. The SPP has also continued to climb moving into April. The measure even posted an increase in the short slaughtering weeks affected by the Easter bank holiday, which would have likely had a negative effect on processor demand.

The average monthly carcase weight for March decreased again, in line with the seasonal trend. The SPP sample averaged 83.91kg for the month. However, the figure was still higher than in the month last year, by just under half a kilo.

As for finished pigs, the GB weaner market also followed a general upward trend in March. Both categories of weaner recorded stronger prices than in the previous month. Following two month of broadly stable prices, 7kg weaners recorded a reasonable £1.38 increase to average at £39.02 per head for March. 30kg pigs also saw an increase in price, climbing £1.65 on the previous month to average £56.65 per head. The monthly-average 30kg weaner price has now shown consecutive month-on-month increases for over a year.

EU PRICES

The EU average pig reference price has climbed sharply over the past four weeks, gaining almost €13, to stand at €170.53/100kg in week ending 23 April. The current quote is the highest since July 2014 and over €43/100kg higher than the equivalent week last year.

These developments reflect the tight supply situation currently in play in Europe, following previous reductions in the breeding herd. Upcoming shortages of finished pigs had been suggested for some time by the skyrocketing EU weaner price, which has been rising for 24 consecutive weeks.

Compounding the lower supply levels is a seasonal increase in demand, partly attributed to the upcoming barbeque season. Anecdotal evidence suggests that strong demand and short supplies of pigs have spurred producers to bring pigs forward to slaughter earlier, leading to a reduction in carcase weights. Furthermore, the reported lack of pig meat in cold stores throughout the EU is likely to reinforce demand for live pigs.

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Particularly strong price increases were seen in Germany; rising almost €14 during the previous four week period to reach €177.58/100kg in week ending 23 April. Similar increases were recorded in the Polish, Dutch and French price over the past month, while Danish values increased more modestly, by around €11.

 The UK reference price also increased by nearly €11 during the previous four week period, reaching €183.86/100kg. Similar to the continent, the UK market has also been affected by tightening supplies. In sterling terms the increase was lower, partly driven by further currency volatility.

UK SLAUGHTERINGS AND PIG MEAT SUPPLIES

In March, UK clean pig slaughterings were 5% lower than the same month in 2016, at 876,600 head, according to latest figures from Defra. The fall in throughputs continues the trend seen over the past few months, and is partly due to an assumed contraction in the UK breeding herd last year. The latest figures correlate with anecdotal comments that over the past couple of months UK supplies of pigs have been tight, contributing to further rises in pig prices. They also correlate with the AHDB estimates of GB clean pig slaughterings. Sow slaughterings also decreased on the year in March by 7%, at 21,700 head. This also follows a similar trend recorded over the past few months.

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In March, average carcase weights were marginally (360g) higher year on year, but were 660kg lower on the month, at 83.2kg/head. Due to the reduction in throughput, and the only slight increase in carcase weights, pigmeat production in March fell by 5% on the year, at 76,100 tonnes.

UK exports of fresh/frozen pork in February fell by 11% on the year at 15,900 tonnes. However, increased unit prices led to the value of exports increasing by 15% year on year to £21.1 million.

The majority of the volume decrease came from a 32% reduction in shipments to Germany. Nevertheless, at 2,600 tonnes, the volume exported to Germany is back to more typical levels for the month of February. As a large proportion of UK pork shipped to Germany is sow meat, a slowdown in domestic sow slaughterings over the past few months is likely to be a contributing factor, despite the firmer German sow market.

FEED MARKET

Looking at the past month in isolation you could be forgiven for thinking that grain markets have been relatively quiet, with feed wheat (spot, delivered East Anglia)  increasing by just 0.7% on the month to 14 April (£1.00/t to £149/t). However, last month also witnessed East Anglia delivered feed wheat hit its highest point since June 2014 (£149.50/t on 31 Mar).

The impact of currency movements over the past month, as well as this season’s tight domestic supplies have further emphasised how uncompetitive UK feed wheat is on the global market.

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Maize prices received a boost earlier in the month following the release of the US Prospective Plantings report. The release by the USDA highlighted the possibility of a tighter maize outlook going into the 2017/18 season. The USDA survey of US farmers planting intentions highlights a switch in production from maize to soyabeans. An estimated 36.4Mha is intended to be planted to maize, some 1.6Mha (4%) down on the area of maize harvested in 2016.

The area intended to be planted to wheat in the US also looks set to fall going into the 2017 harvest. The intended area to be planted to wheat, at 18.6Mha, would represent the lowest area ever planted in the US (on records back to 1919), this is likely a reaction to the lower wheat prices experienced in the US this season.

Bringing it back domestically and February’s GB animal feed production statistics released in April highlighted a 3% (360kt) increase in wheat usage on the year, while barley usage declined by 4% (89Kt).

At face value, it may seem unusual that barley wasn’t included in diets at a higher rate in February, given that the discount of GB average ex-farm feed barley to feed wheat averaged £22.40/t. However, this season the poultry sector is the driving force behind a rise in wheat consumption as animal feed, accounting for 43% of total GB animal feed production so far this season.

Nevertheless, with feed barley being at a substantial discount to feed wheat, inclusions of barley in certain diets, such as pig and ruminant, are expected to be at relatively high levels. Between July and February, cattle and sheep feed production was up by 0.5% at 2.7Mt and 20.8% at 452Kt respectively, while pig feed production was down by 6%, at 1.3Mt.

CONSUMPTION

Volumes of primary pork sold by UK retailers in the 12 weeks ending 28 March fell once again on the year, by 2.5%, while the average unit price increased, by 1.4%, according to latest data from Kantar Worldpanel. As a result, the total spend on pork over the period fell by 1%.

The majority of the decrease in volume sold was driven by sales of leg and shoulder roasting joints falling by 16% and 18% respectively on the year. Marinaded pork sales decreased by 19%, although this category holds the smallest market share. Nevertheless, volumes of belly and mince sold increased by 19% and 14% respectively. Bacon and pork chop/steak sales also increased on the year by 2% and 3% respectively, while the volumes of sausages recorded a marginal (0.4%) increase. Pork sliced cooked meats, which includes ham, performed well, up 3% in volume in the 12 weeks ended 28 March helped by stable prices.

In contrast to pork, the volume of primary beef and to a greater extent poultry meat sold increased on the year during the 12 weeks ending 28 March. This is likely due to a fall in the average unit price for both meats, over the same period. On the other hand, the volume of primary lamb sales during the period fell by over a third although last year’s figures will include the important Easter period.

The share of pork retail prices received by producers remained unchanged on the month in March at 40.5%. Nonetheless, this remains the largest share received by producers since July 2014. While the EU-spec APP increased on the month in March, a greater rise in the average retail price in absolute terms led to the producers share remaining stable. Nevertheless, pig prices remain considerably higher than the same point in 2016, leading to the current producers share being over 10 percentage points up on March 2016.

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This pig meat sector UK market update was prepared by:

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Bethan Wilkins, Millie Askew & Duncan Wyatt
AHDB Market Intelligence

Phone: +44 (0)24 7647 8757/8968/8856

e-mail: Bethan.Wilkins@ahdb.org.uk, Millie.Askew@ahdb.org.ukDuncan.Wyatt@ahdb.org.uk  

Twitter: @AHDB_Pork #PorkMarketNews

The United Kingdom pig meat situation and outlook is analysed in more detail in "Pig Market Trends", published monthly. For further information, click here.

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