UK Pig Meat Market Update
The March 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.
Finished pig prices continued the downward trend apparent since mid-2017 in January. During the month, the EU-spec SPP averaged 147.88p/kg, 2.88p down on the previous month and making this the sixth consecutive month of decline. The SPP for January last year was 2.78p/kg higher, meaning the gap relative to year earlier levels had widened since December. Higher throughputs during the month, as any festive backlog cleared, likely contributed to the falling prices and equally demand has reportedly been lacklustre. Moving into February, the SPP has continued to follow a downward trend, standing at 145.66p/kg for week ended 24 February.
The EU-spec APP in January followed a similar trend, falling 3.21p/kg on the month to average 150.96p/kg. Again, this will have been partly influenced by high post-Christmas throughputs, as well as the downward pressure on price evident to producers throughout the EU. The price differential between the APP and the SPP narrowed in January to 3.08p/kg, with the premium market seemingly coming under greater pressure than the standard market.
The average carcase weight for the APP sample increased by over 2kg between December and January. At 84.25kg, the average was 360g lower than for the SPP sample. Pigs being held back until processing regained momentum after Christmas likely contributed to the rise. Average probe measurements also widened slightly on the previous month, but were in line with the 6-month average.
Weaner prices moved downward overall in January, suggesting there is some uncertainty over the level of finished pig prices in the spring. 7kg weaners averaged £37.55/head during the month, the lowest price since November 2016. This was also £2.85 less than in the previous month, and £1.11 below January 2017. The price of 30kg weaners was more stable, but at £52.66/head averaged 3p less than the previous month and £2.49 less than year earlier levels.
EU pig prices fell significantly throughout January. The EU reference price declined continually up the week ending 4 February, however since then prices have taken a sharp upward turn. Over the past three weeks, prices have risen by €7.25 to €140.95/100kg for the week ended 18 February. Prices were not increasing at the same rate during the equivalent period last year, so the gap between this year’s and last year’s prices has narrowed over the period. For the most recent week prices are €11 below this time last year. The sudden upward momentum reflects a downturn in German slaughterings in particular, but with growth in the number of young pigs and piglets in their November census, whether this will continue is somewhat uncertain.
Looking at member states individually, most have recorded significant price rises in recent weeks. The German reference price stood at €147.65/100kg in the week ending 18 February, which is €13.31 above three weeks earlier. Other major producers also recorded significant price rises over the period, including Poland and the Netherlands. However, Danish reference prices have continued to fall, declining by €2.07 over the past three weeks to €121.92/100kg.
In euro terms, the UK reference price has also continued to decline, exaggerated by some weakening of the pound. The UK reference price fell by €2.86 over the past three weeks to €162.81/100kg for the week ended 18 February. This means that the gap between the UK and EU reference price has narrowed considerably. In sterling terms, the UK price stood 19p above the EU average at 144.57p/kg for the week ended 18 February. This meant the UK price premium had narrowed by almost 9p compared to three weeks ago.
UK SLAUGHTERINGS AND PIG MEAT SUPPLIES
UK clean pig slaughterings totalled 928,900 head in January, 8% higher than year earlier levels. While the year-on-year increase may be somewhat inflated by the extra working day in the month this year, compared to 2017, the direction of travel is clear.
Throughputs were down on the year last December, despite rising in the previous two months. It may be that plant unreliability and poorer finishing conditions generated a backlog of pigs that have subsequently come through. Nonetheless, according to the latest AHDB forecasts, supplies are expected to remain ample during Q1.
With carcase weights returning to a record average of 85.3kg, overall pig meat production was up ahead of slaughterings at 81,800 tonnes. This was 9% higher than in January 2017. These increasing supplies, coupled with higher production in the EU, have meant pig prices have remained under pressure recently. However, some tightening in supply might be expected as we move into the spring, following difficulties with seasonal infertility last year.
In contrast, sow and boar slaughterings were down on January 2017, dropping 4% to 18,500 head. This was, however, an increase on the previous month as processing returned to a normal schedule. Cull sow prices have dropped back which may be limiting the willingness for producers to replace sows at present.
Exports of fresh/frozen pork increased by a further 5% in 2017, reaching 216,000 tonnes. As global export prices were also higher, the increase in value terms was even stronger, growing 16% year-on-year to stand at £293.5 million.
In contrast to the previous year, growth was particularly driven by a 6% increase (+7,800 tonnes) in shipments within the EU. Exports to Denmark rose by around a third (+7,900 tonnes), with this product likely intended for re-export. However, China, the main driver of export growth in 2016, remained the largest single country market. These export volumes actually grew a modest 1% year-on-year (+300 tonnes), which is particularly positive given that overall Chinese pork imports declined by 25% in 2017. For December alone, UK pork exports to China also returned to growth (+3% year-on-year), having been trending lower for the past few months.
Looking at smaller markets, shipments to Hong Kong rebounded after a decline in 2016, with volumes up 9% year-on-year (+1,000 tonnes). Shipments to the Philippines also recorded 40% growth (+1,300 tonnes), while volumes to South Korea increased 21% (+300 tonnes) on 2016 levels.
2017 was also a good year for offal exports, with volumes increasing 6% on the previous year. A 10% decline in shipments to China, the primary destination, was more than compensated for by increasing shipments to Hong Kong and a number of smaller markets. These include the Philippines, Denmark, the Ivory Coast and Japan.
Imports of fresh/frozen pork officially totalled 460,000 tonnes during 2017, which was 5% higher than year earlier levels, and almost a quarter above 2015. German imports in particular grew 17% compared with 2016, reaching over 80,000 tonnes. Shipments from the Netherlands, Spain and Ireland also increased by 8% (+4,000 tonnes), 7% (+2,500 tonnes) and 20% (+6,400) respectively.
While some modest growth in import volumes is reasonable, concerns remain over whether the absolute volumes are realistic. Danish imports remained elevated at 170,000 thousand tonnes for the year, which is almost 75% higher than the 2015 volume.
Looking at other products, bacon imports dropped back a notable 9% year-on-year to 220,000 tonnes. This was primarily driven by a 37% decline in shipments from Denmark, to only 58,000 tonnes. Denmark is therefore no longer the UK’s primary supplier of bacon and has been overtaken by the Netherlands. The decline in shipments reflects a move towards producing more bacon within the UK, which is more cost effective.
Grain markets have been largely bullish over the course of the past month (26 January-22 February). UK feed wheat futures (May-18) remained stable, closing at £139.25/t on 22 February. This was an increase of just £0.75/t on the previous month. Furthermore, the closing prices for the contract had a range of only £2.75/t over the period. As at 22 February, Chicago wheat futures (May-18) rose by £5.68/t on the month earlier, closing at £122.75. Chicago maize (May-18) prices also increased, by £5.26 on the previous period, to close at £106.18.
The latest USDA World Agricultural Supply and Demand Estimates (WASDE) report on 8 February revised 2017/18 world wheat production up by 1.24Mt from January. This was mainly driven by increased production figures for Ukraine (up 481Kt) and Argentina (up 500Kt). However, due to an increased projection for total use, up by 3.09Mt, world ending stocks are forecast lower, but still up on 2016/17 levels.
According to the USDA, the proportion of US winter wheat crops categorised as poor or very poor has increased in several growing states. In Kansas, the largest US wheat planting state, crops rated poor or very poor doubled to 44% from December to January. Meanwhile in Oklahoma, 79% of crops were rated as poor or very poor in January 2018, compared with 17% for the same period last year.
In the February WASDE, Indonesia is now forecast to surpass Egypt as the world’s largest importer of wheat.
Between July and December 2017, the UK imported 1.06 Mt of maize. This is the highest level since 2013/14, according to data from HMRC. This influx of maize into the UK may limit the amount UK feed wheat prices can rise.
The continued dry weather has slowed the rate of maize planting in Argentina. According to the Buenos Aires Grain exchange (BAGE), the intended planted area for 2017/18 is estimated at 5.4Mha. However, only 5.0Mha has been planted as of 24 January, due to the continued drought. With the Argentinian maize projected to be at 35Mt, the highest on record (USDA), the dry conditions could affect both the planted area and yields, resulting in output coming in lower.
Oilseed markets continued to be mixed this month. Paris rapeseed (May-18) prices showed a small recovery, closing at £312.29/t on 22 February, up £10.98/t from 26 January. Meanwhile, over the same period, Chicago soyabean (May-18) also saw an increase, up £18.59/t on the month, to close at £275.83/t. UK delivered rapeseed prices (Erith, Spot) have risen by £6.00/t, from 26 January to £301.50 on 16 February.
Spot UK soyameal prices (Hi Pro-Any origin, Ex-store East Coast) closed at £340.00/t on 16 February, up £43.00/t from 12 January. This is a result of increasing concerns over the drought affecting South American crops. UK rapemeal prices (34%, ex-mill Erith) were £188.00/t on 16 Feb, up £22/t from 12 January.
In the latest WASDE, the USDA reduced the 2017/18 forecast for US soyabean exports for the third consecutive month. US soyabean exports this season are now pegged at 57.15Mt (down 1.64Mt from the previous forecast and 3.4% lower year on year). Meanwhile, Brazilian soyabean exports have been revised up by 2Mt from last month’s WASDE, to a record 69Mt. The devaluation of the Brazilian real and a lower US soyabean protein content this year has helped Brazil capture some of the US market share.
Concerns over the Argentine soyabean crop due to hot and dry weather have continued this month. As a result, the yield potential of the crop is said to be at risk, and 56% of the crops is rated to be in poor/very poor condition. The BAGE currently forecasts the crop at 47mt, 15% smaller than last year. Further cuts to the Argentine crop size would be supportive to the oilseed markets, as the country is the worlds’ largest soyameal exporter and the third largest soyabean exporter. The extent of this will be influenced by what happens in Brazil, where a record crop is currently expected (USDA).
The Brazilian soyabean harvest is lagging behind last year’s pace following persistent rainfall (AgRural). If the lag continues, delays in bringing the 2017/18 Brazilian crop to market could boost US soyabean export sales, and so potentially support Chicago soyabean prices.
In contrast to the latter half of 2017, the new year got off to a slow start for the pork retail market. Fresh/frozen pork sales volumes for the 12 weeks ended 28 January recorded a marginal decline on year earlier levels, driven by falling sales volumes during the final 4 weeks of the period. Nonetheless, with rising retail prices, the value of the market was still 3% higher year-on-year.
The other red meats also recorded declining sales volumes across the same period. However, fresh/frozen poultry sales increased 3% on the year. In contrast to the other meats, poultry prices were 2% lower than year earlier levels, which may have attracted shoppers.
Nonetheless, processed pork products recorded a more positive performance in the 12 weeks ended 28 January. Bacon and ham sales volumes both increased 2% year-on-year, and sausages were up 1%. With rising retail prices, value growth was even stronger at 4% and 7% respectively. Growth in these categories compensated for the decline in fresh pork, meaning total pig meat sales volumes were up just over 1% on 2017 levels during the period. The value of the market overall was 5% higher.
The share of the final pork retail price received by the producer recorded a drop of almost one percentage point in January, to under 40%. This is the lowest proportion since October 2016, though is actually not too far below the same month last year. The decrease was driven by continuing declines in the farmgate price, while retail prices remained stable during the month. However, compared with year earlier levels retail prices were 1% lower during January 2018.
This pig meat sector UK market update was prepared by:
Abigail Schofield, Bethan Wilkins & Duncan Wyatt
AHDB Market Intelligence
Phone: +44 (0)24 7647 8610/8757/8856
Twitter: @AHDB_Pork #PorkMarketNews
© 2018 Agriculture and Horticulture Development Board. All rights reserved.
- 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
- United Kingdom Pig Meat Market Update - November 2017
- United Kingdom Pig Meat Market Update - October 2017
- United Kingdom Pig Meat Market Update - September 2017
- United Kingdom Pig Meat Market Update - August 2017
- United Kingdom Pig Meat Market Update - July 2017
- United Kingdom Pig Meat Market Update - June 2017
- United Kingdom Pig Meat Market Update - May 2017
- United Kingdom Pig Meat Market Update - April 2017
- United Kingdom Pig Meat Market Update - March 2017