UK Pig Meat Market Update

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The November 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.

November 2017

UK PRICES

The EU-spec APP recorded the largest monthly decline since February 2016 in September, dropping 2.59p to average 165.23p/kg. Prices have subsequently continued to decline in October, falling to 160.36p/kg in the most recent week ended 21 October. This was the lowest weekly price since April though is still almost 12p higher than year earlier levels. Factory unreliability, coupled with increasing numbers of pigs coming forwards, has led to supplies outstripping the current levels of demand. EU prices have also been dropping sharply in recent weeks, increasing the attractiveness of imported pig meat and therefore pressurising the domestic price too.

The EU-spec SPP also recorded a fall in September, with the average price declining 2.63p on the month to 161.65p/kg. This slightly larger decline led to the gap between the APP and SPP widening slightly, to 3.58p for the month. Prices in October have continued to follow a downward trend, with the SPP falling to 156.03p/kg in week ended 28 October, the lowest price since April.

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Following a number of plant breakdowns, average carcase weights increased relatively sharply during September, due to pigs being rolled by processors. The APP sample gained over 800g on the previous month to average 83.80kg, which was over 2kg heavier than in the month last year. Weights have generally moved up in October also, reaching 84.69kg for week ended 21 October. The probe measurement has also edged up in recent weeks, standing at 11.7mm for the APP sample in the aforementioned week. This is also indicative of pigs being held on farm longer than usual, resulting in more fat coverage.

Reflecting the falling finished pig prices, the GB weaner market has also come under downwards pressure in recent weeks. The September monthly average price for 7kg weaners recorded a modest decline of 78p on August to £43.77/head. Meanwhile, the 30kg weaner price dropped by just over £1 to £59.07/head. Nonetheless, compared to the month last year, 7kg weaner prices averaged £8.88 more, while 30kg weaner prices averaged £11.67 more.

EU PRICES

In the four weeks ending 22 October, the EU reference price fell quite considerably by €11.73/100kg to €150.78/100kg. This price series has recorded declines for nine consecutive weeks, with declines being particularly noticeable around the end of September. Furthermore, in the week ending 24 September, the EU average reference price slipped below year earlier levels and is currently over €4/100kg lower year on year (week ending 22 October).

The rather steep drop in prices over the past month suggests that supplies of live pigs are greater than demand. In addition to domestic demand amongst the EU being relatively subdued, export demand is struggling too, driven namely by reductions in shipments to China.

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On an individual country basis, pig prices in the EU’s top five producing countries all declined in the four-week period. Out of the top five, Spain recorded the greatest drop in prices in the four weeks ending 22 October, falling €25.48/100kg to €141.07/100kg. Prices in Germany, the bloc’s largest pig meat producer, fell by €9.81/100kg, while the Polish reference price dropped by €10.18/100kg.

In euro terms, the UK reference price recorded a relatively smaller decline over the four-week period of just over €6.70/100kg, to €175.28/100kg. UK domestic prices have not experienced the same degree of downward pressure in recent weeks as continental Europe. With sterling weakening slightly across the four-week period, in sterling terms the UK reference price actually only dropped by £3.65/100kg. Following from this, the gap between the UK and EU reference price has opened up again in the past four weeks, averaging to €24.51/100kg over the period.

UK SLAUGHTERINGS AND PIG MEAT SUPPLIES

In September, clean pig slaughterings in the UK totalled 876,500 head, 4% down on the year, according to latest data from Defra. However, it is worth noting that there was an extra working day in September 2016, therefore slaughterings were actually marginally higher than year earlier levels. Overall, year-to-date (January – September) slaughter was 3% behind the first nine months of 2016, at 7.7 million head.

While the overall trend was largely driven by English slaughterings, which accounted for 83% of UK clean pig throughputs in September, there were different dynamics in the smaller regions. Scottish slaughterings were minimal for a second month in a row (6,000 head, 77% lower than in 2016), as a major plant remained offline. Conversely, in Northern Ireland, slaughterings picked up to 144,000 head, an 8% increase year on year.

UK pig meat production reported a smaller 2% decline on the year during September, totalling 76,300 tonnes. When accounting for the extra working day last year, production on a like-for-like basis was actually higher on the year. This follows from a notable increase in average carcase weights, which reached 84.1kg, a new record high. Pig meat production from January-September was down almost 3% on the year, at 662,100 tonnes.

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Sow and boar slaughterings in September were a notable 13% lower on the year, at 19,900 head. This likely reflects the increased profitability of producers this year, and continues a trend seen throughout much of 2017. Sow and boar slaughterings for the year to date were down 11% overall, at 175,800 head.

Having moved ahead of year earlier levels in July, UK pork exports reported a second consecutive month of growth in August, climbing 9% on the year to reach 17.9 thousand tonnes. The value of these exports also increased by 15% on the year to £24 million, with the average unit price climbing, partly due to the weaker pound.

Export growth was primarily driven by shipments to the EU climbing by 16% year-on-year. Within this, exports to Denmark, likely for re-export, reportedly more than doubled. A 12% growth in shipments was also reported to Germany at 2.4 thousand tonnes. Meanwhile, exports to the Netherlands fell by 37% and shipments to Ireland declined by 19%, to 0.9 thousand tonnes and 2.4 thousand tonnes respectively.

Outside the EU, pork exports to China increased by 11% on the year to 4,300 tonnes, which is particularly positive at a time when Chinese imports are declining overall. This increase more than countered the 3% decline in shipments to Hong Kong. The offal trade was also stable to these regions, with a 60% increase in shipments to Hong Kong outweighing a 16% decline in exports to China. Other smaller markets also took increasing amounts of UK offal, such as the Philippines.

On the import side, fresh/frozen pork shipments during August also continued the trend from the previous month, and declined 4% year-on-year to 38.5 thousand tonnes. However, as for exports, rising unit prices meant the value of this trade was still 8% higher compared to August 2016.

Falling import volumes were primarily due to Danish shipments reportedly declining 14% from the previous year’s elevated figure, perhaps suggesting they are now falling closer in line with expected levels. Although, at 13.9 thousand tonnes, volumes were still almost double the same month in 2015.

For bacon, imports continued to decline in August (-20% year on year), reflecting reports of a shift towards importing more pork and processing it domestically. This move is also reflected in the bacon export figure, with volumes 6% above year earlier levels during August.

FEED MARKET

Over the last month both domestic and global wheat markets have recorded overall declines. UK feed wheat futures (Nov-17) declined by £3.45/t from 27 September to close at £138.00/t on 26 October.  The provisional Defra UK wheat production figure for 2017, released on 12 October is 15.2Mt, up 5.4% on the year. Although the 2017 UK wheat area was estimated 1.7% lower year on year, the average yield is estimated 7.3% higher at 8.5t/ha. UK barley production in 2017 is provisionally estimated at 7.36Mt, up 10.6% on the year. AHDB’s first estimates of 2017/18 UK supply and demand forecast a tighter wheat balance this season, with the balance of availability and domestic consumption projected to be 14% lower year on year at 2.77Mt. The UK barley balance in 2017/18 is forecast at 2.55Mt, up 17% year on year. 

Chicago wheat (Dec-17) futures fell by $10.94/t from 27 September to close at $158.62/t on 26 October. Over the same time period, Nov-17 Paris maize futures fell €5.50/t to close at €150.75/t. Chicago maize futures (Dec-17) closed at $137.99/t on 26 October, down $1.38/t from 27 September.

EU maize prices are being pressured by reports of above average yields from Romania (UkrAgroConsult) along with reports of favourable harvest progression across Europe and Ukraine. This downward pressure on price has the potential to filter through to wider feed grain prices due to increased competition for animal feed demand.

The second provisional results of the AHDB 2017 Cereal Quality Survey, released on 6 October, revealed that only 24% of samples tested met full nabim group 1 bread making specification as opposed to 45% in 2016. With a lower proportion of wheat meeting top milling wheat specification this year, an increase of wheat being pushed onto the feed market is a distinct possibility.

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The global oilseeds markets have been volatile over the last month with an overall decline in Paris rapeseed futures and a small increase for Chicago soyabean prices.

Chicago soybeans (Nov-17) received a boost in mid-October due to the USDA lowering its forecast for the 2017 US soyabean yield to 3.33t/ha from 3.36t/ha in September. Chinese export demand for US soyabeans has also been a supporting factor for prices. Additionally, unfavourable weather in Brazil and Argentina has continued to delay planting progress. With farmers in southern Brazil receiving additional warnings for heavy rains and severe storms forecast between 25-29 October, planting progress may continue to be affected.

UK delivered rapeseed prices have remained fairly constant over the past month with an ample supply of imported rapeseed from the Black Sea region fulfilling most of current demand. At the same time, UK farmers are not engaging to sell as field work is taking priority.

Nov-17 Chicago soyabean futures rose $2.12/t, between 27 September and 26 October, to close at $356.84/t. Over the same period, Nov-17 Paris rapeseed futures fell €3.00/t to close at €368.5/t. Brazilian soyameal prices (ex-store Liverpool) have increased by £13.00/t from 29 September to £317.00/t on 20 October. UK delivered rapeseed prices (Erith, Nov delivery) have increased by £4.00/t from 29 September to £325.00/t on 27 October.

CONSUMPTION

In the 12 weeks ending 10 September, volumes of fresh/frozen pork sold decreased marginally (-0.6%) on the year, according to latest data from Kantar Worldpanel. However, average retail prices increased by 7% over the same period, leading to a 6% year on year increase in total spend.

Volume sales of roasting joints as a whole in the 12 weeks ending 10 September declined year on year by nearly 2%. However, on an individual cut basis, there was more variation. Volumes of both loin and shoulder roasting joints fell by 11% and 8% respectively, while the amount of leg roasting joints sold increased by 15%. In terms of other primary pork products in the 12-week period, the volume of mince sold recorded a 28% increase on the year, which once again may be attributed to customers switching from higher priced beef mince. Sliced cooked meat remained one of few pork products to decrease in price year on year, albeit marginally (-0.4%). However, a rise in volumes sold (3%) led to total spend increasing by 2% on the year during the period.

The producer’s share of the retail pork price decreased by 1% on the month in September to 43.3%, returning to levels last seen in May. Nevertheless, the current share is over 16% (6.1 percentage points) more than the same period last year and on a historical basis remains relatively high. The average retail price remained relatively constant in September, decreasing by less than 0.2% month on month. Meanwhile, the EU-spec APP fell by 2%, driving the month on month decline in producer’s share.

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This pig meat sector UK market update was prepared by:

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Bethan Wilkins, Millie Askew & Duncan Wyatt
AHDB Market Intelligence

Phone: +44 (0)24 7647 8757/8968/8856

e-mail: Bethan.Wilkins@ahdb.org.uk, Millie.Askew@ahdb.org.ukDuncan.Wyatt@ahdb.org.uk  

Twitter: @AHDB_Pork #PorkMarketNews

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