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Bethan Wilkins

Analyst

AHDB Pork Market Intelligence

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Further supply growth likely to keep prices under pressure

Home \ Prices & Stats \ News \ 2015 \ July \ Further supply growth likely to keep prices under pressure

Latest AHDB forecasts for UK pig meat supplies show that the increase in domestic supplies which has been apparent over the last year is likely to continue.

Recent production growth and low levels of sow slaughtering suggest a broadly stable breeding herd, rather than the declines recorded in recent Defra surveys. Combined with continuing productivity improvements and a further modest rise in carcase weights, both slaughterings and production are forecast to continue rising at around the rate seen recently for the rest of this year before possibly slowing down slightly next year.

Although the gap between UK and EU pig prices remains high by historic standards, there is still no sign it is leading to an increase in pig meat imports. With retail buyers still apparently committed to UK sourcing wherever possible and with plentiful domestic supplies available, there is little reason to think that imports will rise much during the rest of this year or next. Meanwhile, the weak euro is making it harder for exports to compete with product from the rest of the EU. Unless the pound weakens, export growth may be limited this year.

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Balancing all these factors, total supplies on the UK market are forecast to grow again this year, albeit at a slightly slower rate than in 2014. Therefore, demand will need to rise if the sustained pressure on pig prices is going to be relieved. A rise in export demand seems unlikely while the pound is so strong against the euro, so the domestic market is likely to be key. So far this year, retail demand for pig meat has been weak, meaning a higher share of production has had to be diverted to lower value markets, keeping prices down.

To read more about the outlook for UK pig meat supplies, click here, and to read our analysis of implications for the pig market, click here.