Supply growth to continue – more demand needed
Latest AHDB forecasts for UK pig meat supplies show that the supply situation which has prevailed over the last year or so is set to continue. Domestic production is expected to increase further and little change is projected for the balance of trade.
Having been broadly stable in 2013, Defra’s June and December surveys suggest that the UK sow herd declined in 2014. However, this trend is not supported by production data and it seems more likely that the breeding herd has actually been more stable. The new forecasts, therefore, assume little change through 2014 and that this stability will continue in the near future. Therefore, productivity growth remain the main driver of production levels and clean pig slaughterings are forecast to carry on rising around 3% year on year. Carcase weights are expected to rise slowly during 2015 and perhaps stabilise into 2016, while sow slaughterings are set to gradually return to more normal levels. Therefore, growth in pig meat production for the remainder of 2015 is likely to similar to the rise in clean pig slaughterings.
Since mid-2013, the gap between UK and EU prices has remained well above 20p/kg. Despite this unprecedented situation, UK imports in 2014 were only slightly higher than the previous year, as pork buyers remained committed to sourcing UK pig meat. If that situation doesn’t change, it seems unlikely that imports will rise significantly in 2015. UK export growth has slowed in recent months, not helped by the weakness of the euro against the pound. This looks set to remain a factor for the rest of 2015, with only modest export growth expected as a result. Taking all these factors into account, it is clear that pig meat supplies are set to be plentiful for the rest of this year and beyond. This is likely to mean that pig prices remain under pressure unless demand picks up to match the higher supply.
More details on the outlook for UK pig meat supplies can be found by clicking here.
To read our analysis of what the latest forecasts may mean for the UK pig market, click here.