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Bethan Wilkins

Analyst

AHDB Pork Market Intelligence

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Has the link between UK and EU pig prices been broken?

Home \ Prices & Stats \ News \ 2014 \ November \ Has the link between UK and EU pig prices been broken?

This year, the gap between UK and EU pig prices has risen to unprecedented levels. This might have been expected to lead to a surge in pig meat imports but they were only up 4% in the first three quarters of the year. It might also have led to a fall in exports as they struggled to compete on price; in fact, exports are up 11% for the year to date. So is the UK market now immune to developments in the rest of the EU?

This year, the gap between UK and EU pig prices has risen to unprecedented levels. This might have been expected to lead to a surge in pig meat imports but they were only up 4% in the first three quarters of the year. It might also have led to a fall in exports as they struggled to compete on price; in fact, exports are up 11% for the year to date. So is the UK market now immune to developments in the rest of the EU?

UK-EU pig price gap compared with UK pig meat imports

New AHDB/BPEX analysis shows that the relationship between the EU-UK pig price gap and UK pork import levels has largely broken down since 2007. However, until this year, UK prices have broadly tracked EU prices, suggesting the UK market was responding to EU prices in a way which ensured that import levels didn’t alter. That now seems to have changed too. This can probably be attributed to retailers’ response to the horse meat revelations of early 2013, which led to increased commitment to sourcing pig meat from the UK.  UK pork exports also now appear to have little relationship to pig price levels relative to the EU.

The big question now is whether import and export trends will remain immune to the gap between UK and EU prices. For exports, the answer may well be yes – future trends will mainly be driven by demand, particularly from emerging markets in Asia. For imports, the answer is less certain. It will largely depend on how the big pork buyers respond. If their commitment to sourcing from the UK wavers then the price gap will have to close. However, if support for UK pork remains strong then supply and demand on the domestic market will be the key price drivers, with the EU market having only a limited effect.

To read the analysis in more detail, open the document below.