UK Pig Meat Market Update

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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.

December 2019

UK PRICES

In October, the EU-spec GB SPP averaged 156.50p/kg, 3p up on the previous month. This was the highest monthly average since October 2017. Stronger export demand drove the upward momentum in finished pig prices. EU prices also remained higher than prices in the UK, so the poor competitiveness of imports will have also played a part. Nonetheless, consumer demand has remained subdued, with falling promotions on pork not helping this situation. Upward price momentum continued into November; by the week ending 30 November, the weekly average price stood at 159.54p/kg.

The average EU-spec GB APP during the same month stood at 158.52p/kg, also nearly a 3p increase on the month before. The difference between the APP and SPP was about 2p in October, the smallest gap recorded since late 2014. By week ended 23 November, the APP has risen further, to 160.81p/kg

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The average monthly carcase weight for the SPP sample in October rose by 550g from a month earlier, to 84.71kg. This was the highest average since March. Weights are typically higher in the colder months when weather conditions are better for pig growth. Weights have remained high into November. The latest weekly average for the week ended 30 November stood at 84.59kg. The average probe measurement in October remained relatively stable at 11.2mm. Despite high weights, backfat thickness has not increased throughout 2019.

The 7kg weaner price in October averaged £40.43/head, mirroring the upward trend in finished pig prices. This marked a month-on-month increase of 60p but the annual difference was bigger, with prices nearly £4 stronger compared with October 2018. Producer confidence has likely been boosted by the increasing value of finished pigs, although reports suggest there has been a shortage of finishing accommodation, which would limit price growth. Similarly, the 30kg weaner price rose to £54.05/head in October, up by nearly £2 on a month earlier. Strength in the 30kg weaner market was evident, with prices over £5 above last October’s level.

EU PRICES

In the four-week period ending 24 November, EU pig prices rose by €4.66 to €187.62/100kg. The average pig price stood at its highest point since September 2013 and about €52 above this time last year.

The price rise has increased in recent weeks, following some stagnation in mid-October. This is because of booming shipments to China resulting in increasingly tight supplies of pig meat, especially for the processed sector.

With the recent acceleration in EU pig price growth, the gap between UK and EU prices has widened a little again. This is despite the fact some strengthening of sterling has boosted UK prices further in Euro terms. For the week ended 24 November, the difference between the UK and EU average stood at about €3, increasing from about €1 in the previous three weeks.

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The continued rise in prices reflects significant growth in some key markets. The Danish pig price was up by over €11 during the four weeks ending 24 November, with strong export demand and a limited supply of pigs.

UK SLAUGHTERINGS AND PIG MEAT SUPPLIES

UK clean pig slaughter in October reached just over 1 million head. This was almost 4% above the same month last year.

Recently, there have been some anecdotal reports that there could be an upcoming tightening of supply, following from difficulties with disease levels in the summer months. However, this doesn’t seem to have limited slaughter levels so far. Pig slaughter generally increases during October, but the latest monthly figure was the highest since Defra switched reporting methods in 2016.

The overall increase was largely a result of a 4% increase in English throughput. Pig slaughter in Northern Ireland also increased by 4% year-on-year, but the Scottish kill was down by 5%. This was the second consecutive month of falling Scottish throughput.

In contrast, at 22,000 head, the number of adult boars and sows culled fell by 9% compared with October 2018. This reflects the younger breeding herd this year following a high cull rate last year. Producers are probably also keen to retain their herd given the improvement in profitability.

At 85.5kg, the average clean pig carcase weight was nearly 1kg higher than in the previous month. Pigs were 1.5kg heavier than during October 2018.

With higher slaughter and heavier carcase weights, pig meat production in October totalled 88,900 tonnes. This meant there was 5% more domestic pig meat on the market than a year earlier.

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Trade

The UK’s pork export market has continued to perform well for another month. In September, shipments of fresh/frozen pork were up 8% on the year, at 21,500 tonnes. While September did record year on year growth, it was not as strong as the growth seen in recent months.

Furthermore, average export prices were considerably higher (27%). As such, the overall export value of pork reached £36.5 million, nearly 40% more than in the previous year.

Unsurprisingly, China accounted for the majority of the growth as the outbreak of African Swine Fever supports demand for imported product. In September, shipments of UK pork to the nation was more than twice that of last year.

Exports to the Netherlands increased by 75% in September. This could be due to the Rotterdam effect, as UK products are exported to some non-EU countries via the Netherlands.

Overall, UK imports of pig meat, including offal and processed products, were relatively steady on the year, at 79,500 tonnes in September. However, in contrast to the past four months and somewhat surprisingly, imports of fresh/frozen pork recorded a 10% (3,800 tonnes) increase on the year. The rise in primary pork imports was offset be a decline in bacon and processed pork products.

The majority of the uplift in primary pork came from Spain (2,500 tonnes), Poland (1,200 tonnes), Ireland (700 tonnes) and Germany (600 tonnes). However, imports from Denmark, the UK’s largest supplier of pork, recorded a 10% (1,200 tonnes) decline on the year.

Despite a slightly stronger sterling: euro exchange rate, rising prices in the EU meant that the average import price of pork was up 20% on the year. As such, the total value of supplies was a third higher than last year, at £92.1 million.

FEED MARKET

Grains

The AHDB Early Bird Survey results were published last month. The figures detail planting intentions for the season and gave an early indication of the effect of a wet autumn on winter drilling. The survey details intentions rather than actual acreages drilled. At mid-November, UK farmers intended to plant 9% less wheat and 12% less winter barley for harvest in 2020. An uptick in spring drilling area is expected with farmers hoping wet fields will be easier to access during the start of 2020. As such, a 28% rise in spring barley intended area to 915Kha is forecast.

November has again been a wet month; rainfall levels in the month to 19 Nov for England were 101% of the long-term average. Physical cereal prices have seen support earlier in the month from the wet autumn to incentivise farmers to sell during the traditionally ‘quiet’ winter months.

The latest corn returns (21 Nov) show UK ex-farm feed wheat (Nov delivery) has risen £8.40/t to £140.00/t over the month (31 Oct- 21 Nov). This rise has somewhat filtered through to UK ex-farm feed barley (Nov delivery), which has risen £2.70/t to £121.90/t over the same period. With a lot of barley around and domestic demand somewhat subdued, the barley rise is lessened.

Looking at exports, trade data for July-September highlight barley has taken precedence with 671Kt exported in the period. Wheat volumes were smaller at 413Kt. Whilst large amounts have been exported, a large surplus still remains. As such, grain prices will look to remain competitive with global markets such as France and Denmark. It will be important to observe the export pace throughout the year, as a carry-over of old crop may occur.

Earlier this month, GB animal feed production (including compound and integrated poultry units) statistics for September were published. A decline in production of animal feed for September was seen with figures down 4% year on year. Animal feed production totalled 1.22Mt for the month of September. Barley inclusions in animal feed production were up 8.4% year-on-year in September. However, wheat inclusion in manufactured feed fell 1.6% year-on-year. Overall poultry feed production increased 1.5% on the month to 612.0Kt.

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Proteins

The longer-term outlook for domestic proteins looks again to a lower production figure next year for oilseed rape. Early Bird Survey estimates detail a 23% decline in oilseed rape planting intentions. Pest issues have been reported in emerging rapeseed crops, noted most in southern England.

UK delivered rapeseed prices (Dec delivery) have increased throughout November to £338.00/t as of Friday 22 November, up £5.50 from the start of the month. Domestic prices have continued to be pressured by the volume of oilseed imports arriving into the UK and the EU. Season-to-date EU rapeseed imports are now at 3.16Mt, as of 24 Nov, up 86% on the same period last year.

UK imports of soyameal this season have totalled 686Kt so far, according to the EU commission, the highest season-to-date import level since 2015/16. According to the latest animal feed production figures, soyameal usage was up 6.8% in the season to September. The global soyabean picture continues to be well supplied as the US soyabean harvest approaches completion.

CONSUMPTION

GB retail sales have continued to struggle in the latest Kantar update. In the 12 weeks ending 3 November, total beef sales declined 0.3% year-on-year, with lamb back 6.4% in volume. Pork volume sales were down 4%.

The volume of primary lamb was down almost 9%, with value back 7%. The declines came across the board. Primary beef performed no better, with volumes back 3%, and value down 4%. Within beef, mince volumes declined 3%, while steaks increased 5%. Burgers, which fall outside of the primary category, recorded some growth although from a small base.

Primary pork volumes declined 5%, with value back 6%. The only categories within primary pork not in decline was marinades and loin joints, both are small categories. Pork sausages and bacon both declined in volume, 4% and 6% respectively, and value.

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This pig meat sector UK market update was prepared by:

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Felicity Rusk, Bethan Wilkins & Duncan Wyatt
AHDB Market Intelligence

Phone: +44 (0)24 7647 8818/8757/8856

e-mail: Felicity.Rusk@ahdb.org.uk, Bethan.Wilkins@ahdb.org.ukDuncan.Wyatt@ahdb.org.uk  

Twitter: @AHDB_Pork #PorkMarketNews

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