UK Pig Meat Market Update

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The June 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.

June 2019

UK PRICES

GB finished pig prices increased in April, with the EU-spec APP averaging 143.80p/kg. Nonetheless, the month-on-month change was only small, at 0.94p. Pig prices were still around 5p below last April’s level, although the annual difference continued to narrow. Last August, prices were almost 16p down year-on-year.

Pig prices typically rise from March onwards, and this year EU prices have escalated sharply due to tightening supplies and increasing Chinese demand. Brexit stockpiling activity has delayed the anticipated uplift in Britain. As these stocks are depleted, we would expect retailer preference for British pork to help recover the GB price premium. However, Brexit and ASF mean the current market circumstances are unusual, so price relationships may also behave atypically.

The first three weeks of May recorded a further slow but steady increase in finished pig prices. The EU-spec APP reached 147.74p/kg in the week ended 18 May, 3p below year-earlier levels.

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The EU-spec SPP followed a similar trend to the APP in April, increasing by 1.44p to average 139.21p/kg during the month. The price also continued to rise during May, reaching 145.34p/kg by week ended 25 May. The SPP has risen slightly faster than the APP, so the price differential has narrowed to 3.29p.

The 30kg weaner market was broadly stable in April, averaging £46.02/head, over £5 lower than a year earlier. Similarly, the 7kg weaner market remained sluggish and was almost unchanged from the previous month at £35.56/head. This was over £1 lower than April 2018. Although rising finished pig prices would support the market, the slow turnaround of finishing units has dampened demand. Into May, prices have started to pick up a little. By week ended 25 May, the 7kg average stood at £36.65/head.

EU PRICES

EU pig prices continued to strengthen in May, reaching €174.21/100kg in the week ending 26 May. This was around €40 higher than the low point of €134.03 recorded in early March. However, the pace of growth has slowed recently, with prices gaining less than €5 in the past 4 weeks.

A small supply of slaughter pigs has primarily supported rising EU pig prices lately. Processors await further rises in Chinese import demand, though reports suggest these are not yet forthcoming. Because of this, we might see prices stabilise for a time. 

The UK price also generally increased in May, albeit by less than the EU average. For the latest week (ending 26 May), the UK pig price actually fell in euro terms, to €166.02/100kg, as the pound fell against the euro. This meant the EU price stood over €8 above the UK price, the largest EU price premium since August 2016.

The EU reference price has now been above the UK reference price for seven weeks. This is an unusual situation, as UK pork typically attracts a premium due to higher demand from some domestic markets. Pork stockpiled in preparation for Brexit has buffered producer prices from the rising cost of imports. We do not think this is a sustainable situation. However, in 2016, the EU reference price was above the UK price for 17 weeks, as the pound devalued following the Brexit vote. The market can take some time to adjust. With the possibility of EU prices stabilising, UK prices may soon regain some lost ground.

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UK SLAUGHTERINGS AND PIG MEAT SUPPLIES

Clean pig slaughter in April was up by 1%, to 888,700 head, according to Defra data released this morning (Thursday 16th May). This keeps pig slaughter for the year roughly in line with the same period of 2018. Higher carcase weights remain a theme, resulting in an increase in production for the year to April of 1% to, 311,000 tonnes. This increase is despite boar and sow slaughterings dropping sharply in April.

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TRADE

Meanwhile, trade data to March is also now available. Imports of total pig meat (excl. offal) have increased in the year to date, thought to be Brexit positioning. Imports from Denmark, Germany and Ireland have all increased significantly year-on-year. Total pig meat imports in the year to March increased 7% to 237,000 tonnes.

Top five importing countries:

  • Denmark: 60,000 tonnes, up 11%
  • Germany: 47,000 tonnes, up 8%
  • Netherlands: 42,000 tonnes, down 3%
  • Ireland: 30,000 tonnes, up 11%
  • Poland: 17,000 tonnes, up 6%

UK exports of pig meat (excl. offal) were relatively stable in the first 3 months of the year, falling by just 0.5%.  Increases to China and the Netherlands have offset declines to other markets, particularly Denmark. African Swine Fever is likely to keep Chinese import demand for pork strong. EU countries, including the UK, will be capitalising on this demand over the summer months, potentially lending continued support to prices here.

FEED MARKET

Grains

The UK delivered feed wheat price (spot) saw a drop of between £12.50/t and £16.50/t from 11 April to 16 May. UK feed barley delivered into East Anglia also saw a drop in value falling by £11.00/t.

Maize usage, by animal feed compounds, season to date (July-March), is at an all-time high of 438.6Kt, 88.9% (206Kt) up from last season (2017/18). Compound feed usage is up this season following the drought of last summer, maize has certainly replaced barley use in feed rations, with barley usage down 15.5% year on year (July-March). The lack of domestic demand has added weight to the domestic feed grain market.

High rainfall in the US is causing major corn planting concerns, shaping the market for new-crop grain prices at the end of the month. New-crop futures were generally following a downward trend until the USDA progress report came out on Monday 13 May. This showed corn planting progress 36 percentage points behind the five-year average sparking a rise in prices. From Monday (13 May) to Friday (17 May), Chicago, London and Paris new-crop wheat futures jumped, with London feed wheat futures increasing £6.25/t.

Longer term, it is likely that European prices will remain pressured with prospects for maize and wheat in the EU and Black Sea are still very good.

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Fears of a no-deal scenario towards the end of the month led to a slight weakening of the pound which offered some support to the domestic market. New-crop wheat futures (Nov-19) experienced a slight upward trend following old-crop (May-19).

The discount into new-crop widened over the month to £17.65/t (12 Apr). 95% of the UK winter wheat crop was rated as “Good/Excellent” according to the latest ADAS crop report

Expectations that EU exports will meet forecasts grew increasingly likely over the month, leading to a firming of EU wheat prices. Although large supplies of US wheat still to be exported provided a ceiling to market gains.

Proteins

UK rapeseed prices delivered into Erith has remained fairly stable with just a £0.50/t rise since 18 April. Delivered prices have followed the trend seen in the European rapeseed nearby futures markets. At the end of April, delivered oilseed prices saw a rise to the highest point since the beginning of February, following a hike in Paris rapeseed futures.

EU prospects for oilseed rape production did weigh on the market a little throughout the month. At the end of April, the EU Commission forecast EU rapeseed production to be the lowest since 2008 at 19.2Mt.

Large US stocks and good progress for the South American harvests have pressured the soyabean market. Gains for new crop, seen week commencing 13 May, were primarily in response to the USDA progress report pegging soyabean planting notably behind the five-year average.

US soyabean imports into the UK are significantly up year on year, as the US is trying to shift excess stock that was probably destined for China. Soyameal usage, season to date (July-March) saw a slight increase from 2017/18. Rapemeal usage saw more of an increase for animal feed, season to date, at over 499Kt. Imports of rapemeal have also increased significantly which will fulfil requirements.

CONSUMPTION

Sales of pork in the 12 weeks ending 21 April:

  • Volumes of fresh & frozen pork increased by 4.7%
  • Household penetration of shoulder roasting joints increased by 21%
  • Total pig meat* sales down on the year

Fresh and frozen pork had a very happy Easter in terms of retail performance. While beef and lamb sales recorded a drop in sales compared to last year, fresh and frozen pork has bucked the trend, according to Kantar Worldpanel.

Shoulder roasting joints were the real winners; sale values increased by 39% and household penetrations increased by 21%, compared to the same period last year. Mince also performed well over the 12 week period, sale volumes increased by 5% compared to last year.

However, the uplift was not recorded across all pork categories. Sales of bacon have suffered, with volumes falling by 6% compared to last year. Sausages and cooked sliced meats have also declined on the year.

The positive performance of fresh and frozen pork and the large uplift in shoulder roast joints were almost enough to compensate for the decline in sale volumes in the other pork categories. As a result, total pig meat* sale volumes only recorded a marginal decline (-0.2%) on the year.

However, the average price per kilo for pork has fallen by 2% on the year. Therefore is it not surprising that with relatively flat sales volumes that this had led to a 2% fall in value compared to last year.

*encompasses primary, bacon, sausages, sliced cooked meats, chilled main meal accompaniments, ready to cook, pulled pork, pork ribs and burgers and grills.

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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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