Ongoing positivity for EU pig prices
UK producers, like those across the EU, are currently experiencing much more positive market conditions than this time last year.
Pig prices across Europe recovered significantly as 2016 progressed, aided by strong growth in demand from Asian markets and some eventual tightening of supplies. For the UK, price growth was aided by the weakening of sterling against the Euro following the Brexit vote. Looking forward, what developments can be expected as the year progresses and what might this mean for UK producers?
Based on the December census results, the EU Commission’s forecasting working group expects the EU pig supply situation to tighten to a small degree in 2017 and slaughterings to fall 1%. Pig meat demand in the EU is already under some pressure with consumption in decline. The forecasting group meeting indicates further declines in 2017 in key consuming countries, led by Germany, where a fall of at least 1% is forecast. Pig prices should remain firm although possibly no longer above year earlier levels in the second half.
How these trends affect the UK market will, of course, also depend on exchange rates. However, there are currently no signs that sterling will move up significantly against the euro, suggesting that import prices will have to remain higher than before the Brexit referendum. The Commission’s working group price forecasts suggest that, by the autumn months, the upturn in momentum may have ended. However, producers should still remain in a profit making situation, even though feed prices have moved up in recent months. This in turn could result in renewed expansion in the pig herd and an eventual upturn in EU pig slaughterings in 2018. However, as for a number of years, annual variations in pig slaughterings are small.
For more information about the latest EU forecasts, including analysis of the December pig census results, click here.
Bethan Wilkins, Analyst Leo Colby, Consultant
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