UK Pig Meat Market Update

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The March 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.

March 2019

UK PRICES

Overall, GB pig prices continued to fall in January, which is typical at this point in the year. The EU-spec APP during January was over 2p below the previous month at 144.41p/kg. Into February, prices have been more volatile but by the week ended 16 February, the APP stood at 143.76 p/kg. This is a 2p drop since the start of the year and nearly 5p less than the same week last year.

The EU-spec SPP declined more significantly in January, falling by almost 3p to average 138.99p/kg. As such, the gap between the APP and the SPP widened, averaging 5.42p/kg, the largest recorded difference between the two measures. This suggests that demand for “premium pigs” has been holding up better than for “standard” pigs. By the week ended 16 February, the SPP steadied at 137.49p/kg, which may reflect tighter supplies cushioning the fall.

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Carcase weights started 2019 at record levels, with the average SPP carcase weight reaching over 86kg for the first time in mid-January. The SPP carcase weight averaged 85.71kg in January overall, 1.1kg heavier than December levels. Heavier carcase weights compounded an increased slaughter rate in the month, leading to higher supplies and downward price pressure. However, in recent weeks estimated slaughterings have dropped off relative to last year.

The GB weaner markets have lacked direction this year. During January, 30kg weaner prices ranged between £43 and £48/head, with the average price of £45.13/head only 18p below December prices. However, prices are over £7 below a year ago as concerns over rising feed costs limit demand from finishers. Mirroring this, 7kg weaner prices have also lacked direction, with the January average only 83p lower than the previous month at £36.16/head. However, 7kg prices were only £1.39 below 2018 levels during the month.

EU PRICES

Following a period of stability in the last quarter of 2018, the EU average pig reference price fell a little early in the New Year but has since started to show some recovery. By the week ended 24 February, the EU average price had increased by over €2 in three weeks to stand at €136.40/100kg. This was the highest level for 4 months, but around €9 below the price a year before. Some member states have recorded even more price uplift, with prices increasing by over €5 over the past four weeks in Spain and even Belgium, for example.

The price rises in Europe mean that the gap between EU and UK reference prices has been narrowing.  However, at 21p in the latest week, the difference remains larger than the long-term average.

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UK SLAUGHTERINGS AND PIG MEAT SUPPLIES

UK clean pig slaughterings in January totalled 935,800 head, around 2.5% above the same month in 2018. Finished pig numbers picked up following a slow end to 2018, perhaps influenced by fewer pigs pulled forward for Christmas last year.

The number of pigs killed in England and Wales in January increased by almost 3% while in Northern Ireland throughputs were up a more modest 1.5%. In contrast, slaughterings in Scotland decreased by just under 1% compared to the same month last year.

The average clean pig carcase weight in January was 83.9kg. This is 1.4kg lower than year-earlier levels, which rather contrasts with weights recorded in the AHDB SPP and APP samples, which have been some of the heaviest on record. A change to the makeup of the Defra carcase weight sample has likely influenced this significant year-on-year decline.

Adult pig slaughterings in the first month of the year totalled 24,500 head, over 14% higher than January 2018 levels, which were already elevated. Although GB cull sow prices are not available, trends in the EU sow market suggest the GB sow price will have remained low in the first weeks of the year. As such, the high slaughter may reflect producers now scaling back herds due to the poor financial conditions. Some may also be culling early in anticipation of the potential for a no-deal Brexit to devalue sow carcases.

Combining these factors meant Defra recorded pig meat production for the month at 82,000 tonnes. This was up 1.5% on the previous year’s level, though the relatively low carcase weight may mean this growth is understated.

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After four months of strong growth, UK exports of fresh/frozen pork fell 15% in December compared with a year earlier, to 16,100 tonnes. Shipments to China and the Netherlands increased, but declining exports to Denmark and Hong Kong offset this. The decline in trade with Hong Kong was larger than the growth to China, meaning the region took less UK pork overall. In contrast, offal exports increased by 10% in December, compared to the previous year. In this case, there was increased demand from China, which drove the overall increase.

Thanks to growth earlier in the year, UK exports of fresh/frozen pork reached 217,700 tonnes in 2018 overall, 1% higher than in 2017. This was not enough to compensate for lower prices, and so value actually declined by 1%, to £292 million. Looking at pig meat* and offal overall, exports totalled 346,500 tonnes, 4% more than in 2017, driven by increased shipments of offal products.

In December, UK imports of fresh/frozen pork fell 5% compared to the same month in 2017, to 35,800 tonnes. The gap between EU and UK prices narrowed in December, possibly relieving some of the import pressure felt in the previous two months. However, the gap widened again in January, so the relief may not continue into the New Year. Imports from Denmark reportedly dropped off considerably in December (-3,600 tonnes). However, an increase from Belgium (+ 1,100 tonnes) and most other key suppliers softened the impact of this.

Bacon imports also dropped 5% in the same month, to 16,600 tonnes. Trade with Denmark and Germany fell, although there was an increase in shipments from the Netherlands. Sausages increased by 66%; this was driven by a very large increase from Ireland that does not match the Irish trade data so should be viewed with caution.

Overall, imports of pig meat and offal in 2018 totalled 987,500 tonnes, a modest decline (1% or 10,200 tonnes) below 2017 levels.

*Total pig meat encompasses fresh/frozen pork, bacon, processed products and sausages

FEED MARKET

Grains

UK feed grain prices drifted towards the end of January. Sterling started to withdraw from its rises seen earlier in the month, exposing UK prices to global trends. UK barley prices struggled to find a floor amidst Brexit export tariff uncertainty and cheaper imported maize.

The restart of the US government enabled the release of January US export data, which fell short of anticipations. This then weakened US grain markets, with a knock-on effect on EU prices. In addition, US supply data highlighted their current wheat stocks were up 7% compared to last year. These factors have contributed to a ceiling on global prices.

Since February began, feed barley prices have fallen becoming closer to feed maize. AHDB feed usage data released earlier this month (7 February), puts the use of maize in feed at an increase of 66% for July – December 2018 from 2017, while barley usage fell 13% in the same period. The lowered demand has discounted feed barley, with many buyers opting for the cheaper maize alternative.

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Proteins

UK delivered rapeseed prices gained slightly in the month supported by a weaker sterling. A strengthened euro has recently lowered Paris (nearby) rapeseed futures, with falling soyabean markets exerting pressure also. Soyabean markets dropped with the recommencement of the US government. January US data showed US supplies remained at high levels.

While the overall mild winter in the UK had led to a prevalence of light leaf spot developing, the recent cold snap has had a positive effect on the rapeseed crop, clearing up incidences of mildew. Yield expectations may be impacted, though it is still too early into the season. Mild weather forecasts are ideal for nitrogen applications. EU and Black Sea crops were unthreatened by the bout of recent extreme cold weather.

Although the ongoing Brazilian harvest estimate was revised 5Mt lower, the final estimate remains higher than trade estimates. Plentiful US soyabean stocks will compete with a fresh South American supply potentially creating lower prices. That could affect rapeseed futures.

CONSUMPTION

During the 12 weeks ending 27 January, GB retail sales of fresh & frozen pork remained reasonably steady compared with the same period a year earlier, according to figures from Kantar Worldpanel.

However, the value of the market did decline by 2% due to a decrease in average shelf price. There was some change in the product mix, with shoulder roasting joints performing well, while sales of leg roasting joints and bellies declined.

Processed products recorded a decline across the period. Bacon sales, in particular, slipped 5% in volume and almost 8% in value, largely due to a reduction in the number of shopping trips including bacon. Sausage sales remained stable in volume but the value did fall 3%. Altogether, this meant total pig meat* sales declined 2% during the period, in both volume and value terms.

Despite extensive press coverage around plant-based diets, pork sales volumes have not taken a significant dent compared to last year. Although looking at the four week period to 27 January specifically, when “Veganuary” was running, pig meat* sales volumes were down 3%, which is a little ahead of the decline over the 12 week period. However, the current downward trends are perhaps as much related to the current uncertain climate, causing shoppers to be more conscious of their spending.

*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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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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