UK Pig Meat Market Update
The December edition of our monthly UK Pig Meat Market Update is now available, providing the latest on prices, production, international trade, consumption and the feed market.
For previous editions of the market update please scroll to the bottom of the page where you can download PDF versions.
The downward trend in GB finished pig prices, which began in July, continued into October. Over the month, the EU-spec APP averaged 149.09p/kg, around 2p lower than in September and 11p down on a year before. The decline in prices this year has been less marked than that recorded in the autumn last year, but nonetheless it still seems supplies of pigs are running somewhat ahead of demand. The weakening of the EU pig market has no doubt also kept pressure on domestic prices. These factors remained in place in early November, with the APP falling to the lowest level since October 2016 in the middle of the month.
As usual, the EU-spec SPP recorded a similar fall in October, with the monthly average of 145.59p/kg down just over 2p compared wit1h September. The gap between the two series therefore stayed the same in October, at 3.5p. Despite some stability in the latest week ended 24 November, the SPP stood at 143.52p/kg, around 10p down on a year before.
As is normal for the time of year, carcase weights were rising during October. The average weight of pigs in the APP sample during the month was 84.11kg, just over a kilo heavier than in September but around half a kilo lower than in October 2017. At this point, there were fewer reports than last year of rolled pigs due to lack of demand and the rising cost of feed was possibly not allowing producers to feed pigs to heavier weights economically. An increase in probe measurements accompanied the heavier carcase weights, to an average of 11.5mm, but this was below the 11.7mm recorded in October 2017. More recently, weights have climbed further, with poor demand from processors now reported.
Some softening of the 30kg weaner market reflected the downward trend in finished pig prices. The average price for 30kg store pigs dropped by over £4 on the month to £48.72/head. This is the lowest monthly price for two years, with rising feed costs likely accentuating the price falls. The October average was just over £8 lower than a year before. Conversely, there was actually a slight rise in the price of 7kg piglets, which rose by 51p to £36.65/head, around £6 lower than a year before.
Following the trend set in early September, the EU reference pig price continued to decline, according to data from the European Commission. By the week ended 18 November, the measure stood at €135.62/100kg, recording declines for eleven consecutive weeks. However, in the subsequent week prices rose marginally, to €135.71/100kg. The latest figure is around €10 below year earlier levels.
Over recent weeks, reports indicate that supplies of pig meat in Europe have remained plentiful, while retail demand seems to be stable. Combined, this has added some pressure to the market, with African swine fever (ASF) continuing to add some uncertainty, especially in regards to future trade. However, the recent stability perhaps suggests some seasonal uplift in demand is beginning to meet the rising supply levels.
Across the EU, prices have been under varying amounts of pressure. Danish and German prices have actually increased over the latest four-week period. Conversely, prices in Spain and France recorded declines of €5 and €1 respectively. Meanwhile in the Netherlands, prices were virtually stable. Prices in Belgium had been declining sharply since the announcement of an ASF outbreak, although in the most recent period they have also increased somewhat, gaining €1.70.
Sterling has had a somewhat turbulent ride in recent weeks following Brexit announcements. Overall, in the four weeks to 25 November the pound has weakened slightly against the Euro, with the latest EU reference price in sterling terms standing at 120.39p/kg. This, combined with UK domestic pig prices now falling faster than the EU average, has narrowed the the gap between UK and EU prices to 24p, although this is still much larger than the long term average.
UK SLAUGHTERINGS AND PIG MEAT SUPPLIES
Following a decline in September, UK clean pig slaughterings were up over 4%, compared with a year before, in October. According to figures from Defra, the monthly kill was 963,000 clean pigs.
Growth was strongest in Scotland, reflecting the fact a major processor was offline at this point last year. In England alone, the increase was just 2%, while in Northern Ireland there was a 1% decline, likely due to slaughtering some of the displaced Scottish pigs there last year.
Considering that October contained an extra week day this year, compared to the month in 2017, this theoretically indicates a slower daily slaughter rate this year. However, there are mixed reports of factory breakdowns and Saturday kills both this year and last, so slaughter per working day may not be a fair representation of the market at present. It remains to be seen the extent to which throughputs pick up over the coming weeks during the key Christmas procurement period. Achieving the 3% annual increase anticipated for October-December in the October forecast will require strong year-on-year growth.
Average clean pig carcase weights during October were 1.5kg lower than in October 2017, at 83.6kg. This dampened supply levels to some extent, although a rise in adult sow and boar cullings partially compensated for this, rising 19% above the level a year earlier. Pig meat production was therefore up 3% at 84,000 tonnes.
Sow slaughterings have been generally higher throughout 2018, though this had been attributed to an unusually low culling rate last year. However, at 24,200 head, the latest month’s figure is outside the normal range and is in fact the highest monthly slaughter since January 2016. This is perhaps the first indication that weakening profitability may start to have an impact on the breeding herd over the coming months.
UK trade in pig meat fell again in September, as both exports and imports declined compared with a year ago, according to the latest figures from HMRC. In the year to date, pig meat imports are now 4% lower than in the same period in 2017, while exports are on a par with year earlier levels.
The price discount of European pigs to UK pigs reduced significantly in August, possibly deterring imported product from the EU in that month, and this situation continued into September. The discount of EU to UK prices was as low as 10.72p/kg in the week ending 2 September.
Fresh/frozen pork imports were reportedly 2% lower than in September 2017, at 35,300 tonnes. This is similar to the trend for the year so far, which shows pork imports have been 6% below last year. Nonetheless, contrary to most other established trade partners, Ireland and Spain sent more pork to the UK during the month. Falling shipments from the Netherlands and Denmark were primarily responsible for the overall decline, dropping back 17% (800 tonnes) and 5% (600 tonnes) respectively. Since September, EU prices have fallen faster than those in the UK have. This may once again stimulate imports in the latter months of the year, and so put pressure on UK prices.
Exports of fresh/frozen pork fell in September to 15,400 tonnes, a decline of 14% year-on-year. The year to date figure is also 3% down year-on-year for pork alone, despite stability for pig meat overall. The value of pork exports has fallen by 5% to £209 million in the year to September, reflecting a challenging global market. A lack of shipments to Denmark during the month, product likely normally re-exported elsewhere, drove the decline in exports in September. This aside, there was actually some strong growth in exports to other destinations during the month. Perhaps the widely reported problems in China are starting to feed through, and UK exports in September rose by 24% (700 tonnes) year on year. Shipments to the US also doubled (+500 tonnes), which is particularly encouraging as this is a high value market for UK product.
Global grain markets tended to drift sideways this month, with most market activity leading to prices falling overall. Several key organisations increased their global wheat production figures in their latest estimates released during the month. This accompanied a bumper spring wheat crop prediction for 2018/19 in the US and an increase in planted area for the following season (read more here). Despite this, the latest wheat stocks figure release from the Food and Agriculture Organisation of the United Nations (FAO) of 264.4Mt is 12.4Mt lower than 2017. This portrays a picture of global tightness, despite production estimates increasing. Contributing to the squeeze, the Australian government organisation ABARES expect that wheat production for 2018/19 will be 13% lower than their September estimate (read more here). With the stocks-to-disappearance ratio (a measure of stocks relative to consumption and exports) of the major wheat exporters already at its lowest since 2007/08, any further production drops could raise prices going forward.
Maize planting conditions in South America are currently favourable, with bumper harvests predicted for Brazil and Argentina for the upcoming season. However, with the current outlook for maize and wheat remaining tight amongst global exporters, this could support prices here in the UK, especially if any concerns grow surrounding the South American maize crop (read more here).
In the UK, wheat markets have been on a downward trajectory for most of the month, largely reflecting anticipated reductions in demand from the bioethanol sector and upward revisions to global wheat production. Wheat usage in GB animal feed production (including integrated poultry units) reached record levels for the month of September, while barley usage fell. Maize usage for September is 24% higher than last year, contributing to imports sitting significantly above the five-year average for the season so far (read more here).
Following a rise in the pound after the draft Brexit deal announcement last week (12-16 November), a succession of resignations in the Conservative government caused the pound to fall 1.5% from Friday 9 Nov to Friday 16 Nov, and pushed UK feed wheat (May-19) up £2.00/t across the week (Friday-Friday) (read more here).
Global oilseeds markets saw mixed activity throughout the month, with various factors affecting prices. At the start of the month, expectations of a bumper US soyabean crop and record high ending stocks pressured US soyabean markets, along with continued trade tensions between the US and China. Hopes for a resolution in these disputes caused uplift to US prices the following week, with prices continuing to be stable over the following fortnight. The USDA revised down their world soyabean production estimate on the 8 November by 1.98Mt, driven by lower US production. However, forecasts for world stocks indicate growth of just over 2Mt due to a cut in US export forecasts. In South America, planting of the Brazilian soyabean 2018/19 crop is progressing under favourable conditions, with production estimates remaining high. While a high South American harvest next season could weigh on global prices, any delays to planting could tighten stocks going forward.
At an EU level, consultancy firm Strategie Grains estimated the EU-28 rapeseed planted area for 2018/19 to be the lowest since 2008/09, with EU-28 production 10.7% below last year’s figure. This sentiment continued as the month progressed, with downward revisions later made to the 2019 French rapeseed area by the French Federation of Oilseed Crop Producers (FOP) (Reuters). The currency volatility sparked by the draft withdrawal deal last week had a mixed effect on EU rapeseed. UK delivered rapeseed prices (Nov delivery) ultimately gained support from the weaker currency, while Paris rapeseed futures (May-19) fell in Euro terms.
During the 12 weeks ended 4 November, GB retail sales of total pig meat* increased in volume by 1.4% year-on-year, according to data from Kantar Worldpanel. Kantar reports this growth comes from 419,000 more trips made this year, compared to the same period last year. However, as the average shelf price recorded a decline, the value of the market fell slightly, by 0.4%.
The volume of fresh and frozen pork sold increased 2.2%, while the value of this market slipped 0.5%. Within this, chops and steaks increased by 3.9% in volume, while the average shelf price dropped 3.6% meaning the value remained steady. Shoulder joints also supported the growth in fresh and frozen sales, with the volume up 34%. Much of this growth was reflective of an increase in promotions. In contrast, loin roasting joints and leg roasting joints recorded declines in sales volume.
Bacon purchases remained steady on the year in volume, but also recorded a decline in average shelf price meaning that the value suffered. Sausage demand appears to have stopped sizzling, recording a small growth of just 1.3% in volume during the period. Looking at the most recent four week period specifically, the trends reflect those recorded across the whole 12-week period, but often at a more exaggerated levels.
*encompasses primary, bacon, sausages, sliced cooked meats, chilled main meal accompaniments, ready to cook, pulled pork, pork ribs and burgers and grills.
This pig meat sector UK market update was prepared by:
Rebecca Oborne, Bethan Wilkins & Duncan Wyatt
AHDB Market Intelligence
Phone: +44 (0)24 7647 8631/8757/8856
Twitter: @AHDB_Pork #PorkMarketNews
© 2018 Agriculture and Horticulture Development Board. All rights reserved.
- United Kingdom Pig Meat Market Update - December 2018
- United Kingdom Pig Meat Market Update - November 2018
- United Kingdom Pig Meat Market Update - October 2018
- United Kingdom Pig Meat Market Update - September 2018
- United Kingdom Pig Meat Market Update - August 2018
- United Kingdom Pig Meat Market Update - July 2018
- United Kingdom Pig Meat Market Update - June 2018
- United Kingdom Pig Meat Market Update - May 2018
- United Kingdom Pig Meat Market Update - April 2018
- United Kingdom Pig Meat Market Update - March 2018
- United Kingdom Pig Meat Market Update - February 2018
- United Kingdom Pig Meat Market Update - January 2018
- United Kingdom Pig Meat Market Update - December 2017