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 2017

UK PRICES

In May, GB pig prices continued their upward march. The monthly-average EU-spec APP gained 4.2p compared to April, reaching 163.23p/kg. This meant the figure was almost 43.8p above the equivalent year earlier figure. Price increases have continued into the first three weeks of June, meaning prices have now been rising for 16 consecutive weeks. For week ended 17 June, the APP stood at 165.60p/kg, the highest figure since June 2014.

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The EU-spec SPP followed a similar trend to the APP in May, with the price increasing by over 3p during the month to average at 159.64p/kg. With the APP increasing at a slightly stronger rate than the SPP, the gap between the two series grew slightly as the month progressed. The APP price premium started May at 3.4p, and had increased to 3.8p for the first week in June, although this has since fallen back. The latest SPP, for week ended 24 June was 162.28p/kg.

In May, average carcase weights declined over half a kilo compared to the previous month, with the APP sample averaging 82.2kg. There was a downwards trend throughout the month, although there was some uplift in the first two weeks of June. Compared to a year earlier, carcase weights continue to trend higher and the difference is increasing. In May, the APP sample averaged 0.8kg higher than the same period in 2016. This was the largest year-on-year increase for any month in 2017.

The GB weaner market also showed a generally increasing trend during May. 7kg weaners gained £2.40 on the month, to average £42.90 during May. 30kg weaners saw a more modest price increase of £1.69 during the month, to average £59.90. Nonetheless, this series continues to reach record levels, with the current high being £60.86 per head recorded for week ended 17 June.

EU PRICES

The average EU pig reference price climbed once again in the four weeks ending 25 June, to the highest level since October 2013.

At €176.97/100kg, the current quote is €1.43/100kg up on the week ending 28 May. While the rate of the increase has slowed, compared to the four weeks ending 28 May, the price remains €21.79/100kg higher than the same week in 2016. Over the past month it has been heating up across the continent which will have brought some associated barbeque demand for pork.

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On an individual country basis, Denmark, Poland, the Netherlands and Germany all recorded marginal price increases (less than €1/100g) in the four weeks ending 25 June. French prices recorded a modest €1 gain over the same time frame to stand at €160/100kg, while the Spanish reference price climbed by nearly €6, standing at €172.92/100kg in the week ending 25 June.

The UK reference price recorded a marginal increase (0.2%) over the same time frame and stood at €184.10/100kg in the week ending 25 June. Nonetheless, with the pound slipping further against the euro, in sterling terms the UK reference price recorded a larger gain (1.4%) over the past four weeks, reaching £161.74/100kg in the week ending 25 June.

UK SLAUGHTERINGS AND PIG MEAT SUPPLIES

UK production of pig meat was 74,300 tonnes in May, up 1% compared to the same month in 2016, and the first year on year increase seen in 2017, according to latest data from Defra. The increase in May came about due to higher throughputs of clean pigs and sows, which may be related to an extra working day in May this year. May saw 870,800 clean pigs slaughtered, which is 83,300 more than in April and nearly 1% higher than a year earlier.

Clean pig carcase weights were also 600g heavier than in May last year. Although, weights have been declining for the past few months and this typical seasonal trend continued into May, with the average weight coming in at 82.1kg. This is a further 900g lighter than the month before.

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Sow slaughterings increased slightly month on month, to 19,300, although the longer-term downward trend persists. The figure is 7% below that seen in May 2016 and further supports the view that stability is gradually coming into the breeding herd.

UK exports of fresh/frozen pork remained behind year earlier levels in April, at 18.6 thousand tonnes. This was 7% lower than the same period in 2016, although this still represented a 27% increase on 2015. Increased average unit prices also meant the value of UK pork exports was 9% higher year-on-year, at £24.1 million. This was helped by higher European pig prices compared to a year earlier, alongside the weakness of the pound which minimises any price rises in the currency of importing nations.

European shipments were largely responsible for driving the overall decline in export volumes. In particular, lower sow slaughterings this year led to a notable decrease in exports to Germany, with volumes down on the year by almost a third. Shipments to Ireland, the Netherlands and Sweden also posted declines, although there was a modest increase in exports to Denmark (+8%) compared to the same month last year.

Nonetheless, shipments to China continued to increase during April, reaching 4.5 thousand tonnes which was 17% higher than a year earlier. This meant exports to China occupied almost a quarter of the total export market volume during the month. UK pork must be competing successfully on the Chinese market, given their import volumes were actually behind year earlier levels during April. With Chinese import demand reported to be slowing, the success of UK exports to this market for the rest of 2017 remains to be seen.

Fresh/frozen pork import volumes continued to climb on the year during April; rising 22% to 36 thousand tonnes. Contrary to previous months, the increase was not primarily driven by rising Danish shipments, which were only a relatively modest 7% higher year-on-year. Instead, increasing shipments from other European countries was key. Imports from Germany showed particularity strong growth compared to April 2016. This may be related to the takeover by Tonnies of Tican. As a result de-boning and bacon processing of pig meat for the UK market has been transferred from Denmark to plants in Germany and the UK. The logistical change was originally announced last year.

Bacon imports, the second largest imported pig meat product by volume, declined 17% in April compared to a year earlier. This was driven by falling shipments from both Germany and Denmark, again possibly reflecting the move towards importing more pig meat as pork and processing it into bacon in the UK.

FEED MARKET

Over the past month global and domestic grain markets have been largely driven by weather. With hot and dry weather prominent across key grain growing regions at the moment, markets are considering how conditions between now and harvest could impact on new crop prospects.

In response to adverse conditions in parts of the US, EU and Black sea region, amongst other factors, wheat futures have risen over the past month. New crop UK feed wheat futures (Nov-17) climbed £5.50/t between 25 May and 21 June to close at £147.00/t.  Similarly, new crop Paris milling wheat futures (Dec-17) gained €7.50/t over the same time frame, to close at €178.75/t on 21 June.

The US wheat futures markets have arguably seen the most activity over the past month, with new crop (Dec-17) Chicago wheat futures gaining 8% ($13.04/t) between the 25 May and 21 June, to close at $184.43/t.

On the other hand, Dec-17 Chicago maize futures recorded a slight decrease ($0.30/t) over the same time frame, closing at $152.26/t on 21 June. In response to weather concerns the contract had risen to $159.84/t on 6 June, a high for this period, before falling back due to improved conditions across parts of the US maize belt.

Defra’s latest UK supply and demand estimates, released on 21 June, suggest that the UK will be a net importer of wheat in 2016/17 and enter the new marketing season with a relatively low level of stocks.

Imports of wheat this season have been forecast at 1.7Mt, 13% higher than in 2015/16, while exports have been pegged at 1.5Mt, 47% lower than last season. While export demand is expected to fall, total domestic consumption of wheat in 2016/17 is forecast to rise by 6% on the year. Usage of wheat and barley in 2016/17, for animal feed, has been pegged at 7.2Mt (up 2% on 2015/16) and 3.6Mt (up 1% on 2015/16) respectively.

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Similar to grains, global weather developments have been a key watch point for protein markets. Chicago soyabean futures (Nov-17) closed at $340.86/t on 21 June, $4.22/t lower month on month (25 May – 21 June). Furthermore, the contract fell by over $8/t from 16 June, a high for this period, due to favourable weather in parts of the US. 

The latest USDA World Agricultural Supply and Demand Estimates pegged global soyabean closing stocks for 2016/17 3Mt higher than in May, at a record 93.2Mt, which weighed on markets earlier in the month. Furthermore, with limited changes to other supply and demand figures month on month for 2017/18, apart from a 0.5Mt reduction in forecast exports, closing stocks for 2017/18 are forecast at 92.2Mt (88.8Mt in May).

Unlike soyabeans, Paris rapeseed futures (Nov-17) closed up marginally (€0.75/t) on the month (25 May – 21 June), at €362.25/t on 21 June. Nonetheless, similar to soyabeans, the contract has fallen by €8.00/t since 19 June, partly on the back of improved EU weather prospects.

New crop UK delivered rapeseed prices (November delivery, Erith) have fallen by £2.00/t since the 26 May to £315.50/t on the 23 June.

CONSUMPTION

Volumes of fresh and frozen pork sold by UK retailers in the 12 weeks ending 21 May fell by 1.3%. It has been something of a challenging year for the segment so far where volume is concerned, according to data provided by Kantar Worldpanel. However, total spend was up by 1.6%, reflecting price inflation which has been seen across all red meats, as consumers start to feel the pinch. Fresh and frozen pork saw prices rise 2.9% year on year.

The onset of BBQ season can result in some changes in pork demand. Roasting joints have suffered accordingly, not helped by the fact that these cuts have also seen the greatest price rises. Sausages have been selling well; 1.3% higher despite being 2.1% more expensive. Perhaps encouraged to BBQ by the drier weather in the period running up to 21 May, shoppers have been making bigger trips, although retailers have also felt a reduced need for promotions. Bacon prices have hardly changed and sales have performed relatively well, up 2.3%. The largest single sector by value is sliced, cooked meats, which is one of the few areas where prices have actually fallen and has seen increases in both sales volume (3.2%) and value (1.5%).

The producer’s share of the retail pork price increased marginally in May, reaching 43.2%, the highest point of the year so far. This was one percentage point greater than April, while 11% higher than May 2016.  This has now exceeded the July 2014 level and is the largest share received by producers since December 2013. The farmgate price continued to increase slightly in May, rising by 2.6% on April, and up 36.6% on the same period a year earlier. Meanwhile, the retail prices fell 0.6% in May against the previous month, but remained 0.5% above May 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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