A roller coaster year with more uncertainty to come?
2016 was a year of highs and lows for the UK pork sector. In March prices fell to their lowest level since 2008. This was followed by 37 continuous weeks of price rises, the longest period of increases on record.
Higher supplies at the beginning of the year drove price falls up until late March. Supplies then began to tighten, European prices began to rise and Chinese demand was high, which led UK prices to begin to increase. In late June the increase was accelerated by the fall in the value of the pound which followed the result of the EU referendum. The fall in the value of the pound made imports to the UK more expensive, while making UK exports more competitive. Despite this, tighter domestic supplies led to a rise in UK pork imports. This was despite the EU average pig price moving above the UK price in sterling terms between September and October.
Moving forward supplies are expected to remain tight in the UK in the first half of 2017. Other than that there remains a great deal of uncertainty, particularly surrounding the UK's relationship with the EU. The weak pound, driven by this uncertainty, should continue to make UK exports more competitive as well as making imported product less competitive on the UK market. However this will also drive up the cost of inputs such as feed and fuel, making this a time when producers will need to ensure they have close control over their costs.
To read more of our review of 2016 and some more factors that could affect the UK pork industry going forward, click here.
Mark Kozlowski - Senior analyst