UK Pig Meat Market Update

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The January 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.

January 2020

UK PRICES

Having started to increase again during September and October, GB finished pig prices continued to rise during November and early December. The monthly average GB APP for November was 160.56p/kg, the first time the monthly average has topped 160p since autumn 2017. This was around 13p higher than a year earlier.

The rise in prices has been sustained by strong demand on the export market, with prices on the continent also remaining elevated. Relatively subdued demand in the UK, where most British pork is traded, does limit the positive outlook though.

By week ended 21 December, the APP had risen to 163.83p/kg. The SPP has also been on an upward trend, averaging 158.60p/kg in November and 161.91p/kg in December. The SPP has generally been increasing more rapidly and in the week before Christmas, the gap between the two prices was the narrowest since the series began in 2014.

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Carcase weights in the SPP sample during November were close to levels a year earlier, though there was a little more growth within the APP. This contrasts with previous months, when weights were sharply above 2018. Weights had peaked in mid-October at just over 85kg before easing back slightly, reflecting pigs pulled forward in advance of the Christmas holidays. The monthly average for November was 84.60kg for both the APP and SPP samples. By Christmas, the average SPP weight had fallen to little over 83kg.

The strength of finished pig prices has helped to pull weaner prices higher this year, with producers increasingly confident that prices will remain firm this year. Prices have continued to climb throughout November and December. The monthly average 7kg weaner price for November was £41.14/head, up nearly £1 on the October average and similar to last November. The price passed £42/head in late December, the highest level since October 2017.

EU PRICES

In the four-week period ending 15 December, EU pig prices rose by €12.43 to €197.01/100kg. The average pig price looks to be at the highest weekly level in 20 years and is more than €60 higher than this time last year.

The price rise has accelerated in recent weeks, following a period of stability in mid-October. This is because of booming shipments to China resulting in increasingly tight supplies of pig meat, especially for the processed sector. China has recently reduced its external tariffs for frozen pork from 12% to 8%, effective 1 January 2020.

With the recent acceleration in EU pig price growth, the gap between UK and EU prices has widened a little again. For the week ended 15 December, the discount of UK price to the EU average stood at about €6.

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The continued rise in prices reflects significant growth in some key markets. The Danish pig price was up by over €11 during the four weeks ending 24 November, with strong export demand and a limited supply of pigs.

UK SLAUGHTERINGS AND PIG MEAT SUPPLIES

In November, UK clean pig slaughter reached 961,300 head, 1% more than the same month in the previous year. The growth came despite the fact November had one less weekday compared to last year. Reports suggest many major processors worked additional days over the weekend, with both Christmas and Chinese New Year approaching.

The increase in slaughter was driven by Northern Ireland, with the other UK regions killing a similar number to last year. Clean pig slaughter for the year so far now totals 9.95 million head, 1% more (110,900 head) than the same period last year

Finished pig carcase weights in November averaged 85.5kg, 1.5kg heavier than in the previous year. However, weights recorded a marginal decline compared to October. Slaughter of sows and boars in November totalled 22,400 head, the same as in the month last year. Cull rates were relatively high last year, and as such, adult slaughter has been considerably lower for most of this year. This may start to change in the coming months, with expectations the age profile of the herd will have risen.

Pig meat production reached 85,500 tonnes, 3% more than in the same month last year. As such, production in the year to November totals 877,600 tonnes, 3% more than last year.

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Trade

The latest figures published by HMRC show a 20% year-on-year increase in UK pork exports in October. In contrast, with EU prices still outstripping those in the UK, pork imports were 7% lower than last year. Imports were still higher than in October 2017 though.

October pork exports were at a record high of 25,100 tonnes. China accelerated its position as the UK’s number one market for exports, reaching a 41% market share. Volumes to China increased by nearly 150% compared with a year earlier. Volumes exported to the EU decreased by 9% compared with a year earlier. This probably reflects product increasingly being redirected to the Chinese market.

On top of the increase in volumes exported, the value of supplies totalled £44.1 million, nearly 60% higher than October 2018, as a result of higher export prices. In contrast, total offal exports fell by almost 25%, down from 9,500 tonnes in October 2018 to 7,300 tonnes in October 2019. This stemmed from a significant decline in shipments to Hong Kong, which were less than 20% of last year’s volumes. Export codes can be ambiguous and it may be that some of this product is now being exported to China as pork. The value of offal exports in October was £8.1 million, down 8% in a year earlier.

UK pork imports in October totalled 40,500 tonnes. Imports from Denmark in particular were lower; Danish imports accounted for 37% of the total in the month last year, but were only 31% in October 2019 as supplies fell by 22%. Given the strong prices across the EU, the value of pork imports went up by 17% to £92.9 million. Bacon imports fell by 17% in October, compared with a year earlier, again largely resulting from a 31% decline in supplies from Denmark. It was a similar picture for processed pig meat, which fell by 20% on the month last year given an 85% fall in Danish volumes. Sausages were the only category to record an increase in imports, up 13% year-on-year, despite another large drop in Danish supplies.

FEED MARKET

Grains

Over the course of the last month UK grain prices have generally firmed, supported by the ongoing delays to domestic drilling of winter crops. However, the result of the UK general election has seen the value of sterling firm considerably against both the euro and the dollar, reducing prices towards the end of the month.

In the last month the release of the UK cereal supply and demand estimates highlighted the high volumes of wheat, barley and oats that are in the domestic market. The large stocks of all three of these crops will limit price rises on the back of delayed drilling.

As the window of opportunity for winter planting reduces, there is an increased likelihood of a switch to spring planting. If plantings are dominated by spring barley then we could yet see further pressure for this well supplied market.

In the global market, maize prices had been under pressure for most of the month on the back of increased global supplies. However, with the US and China reaching an agreement over their trade dispute prices have surged in the past couple of days. Global wheat prices have also reacted positively to the news, with Chicago futures extending recent, new crop concern, delays.

The latest release of GB animal feed production data (including integrated poultry units (IPU)) shows that total production of feed is down 4.8% year-on-year. The reduction reflects the increase need for compound feeding last season in response to the drought. Production of feed for pigs and poultry (including IPU) remains up on the whole, although there is a reduction in pig growing feed.

Barley inclusions in animal feed production are up year-on-year (6.9%), to October, while inclusions of wheat (-3.9%) and oats (-25.5%) are down. For barley, this is a marker of the low price of barley relative to other feed ingredients.

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Proteins

Oilseed prices have continued to rise over the course of the past month. European rapeseed prices have jumped considerably, responding to high prices for vegetable oils. UK prices have followed the gain in EU futures but have been limited by the rise in the value of sterling.

Soyabean prices had been under pressure since mid-October, responding to the overwhelming pressure of global supplies in the face of limited Chinese demand. However, with China and the US reaching a “phase one” agreement in their long fought trade dispute, prices have firmed.

Furthermore, ongoing dryness in Argentina threatens to delay soyabean plantings and impact the size of the crop. With a shortage in domestic oilseeds this season the UK has imported a high volume of soyabeans, soyabean meal and rapeseed. The primary origin of imports of soyabeans and meal is South America.

CONSUMPTION

The latest update from Kantar, covering the 12 weeks ending 1 December, continues to bring news of red meat performing badly. Processed meats in particular are struggling. Fewer shoppers are purchasing red meat, with fewer promotions on as well. Despite fewer shoppers purchasing red meat, many still do. 

Total pig meat retail sales fell almost 4% in volume, however value only dropped by around 0.5% because of price rises. Almost all the main primary pork categories recorded declines, with bacon and sausages doing poorly in the processed sector. Bacon has struggled throughout 2019, with previous updates from Kantar citing health concerns as the driving factor.

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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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