UK Pig Meat Market Update

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The January 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.

January 2017

UK PRICES

The EU-spec APP declined once again in November, dropping 3.70p on the month to average 156.30p/kg; the largest monthly drop since February 2016. Prices continued to fall throughout the following month, sinking 0.75p in week ended 16 December to 154.25p/kg, which was actually a marginal 0.58p below year earlier levels. Demand was outweighed by ample supply in November, leading to downwards pressure on prices.

In November, the EU-spec SPP also reported a decline, falling 2.36p on the month to average 153.25p/kg. As such, the gap between the APP and SPP for the month as a whole remained stable, at 3.05p. Prices continued to decline as December progressed, albeit at a steady rate, falling to 150.40p/kg in the week ended 23 December.

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Average carcase weights fell sharply in November, contrary to the trend witnessed in previous months, potentially as result of decreased disruption from plant breakdown compared to the months prior. The APP average weight in November was 880g lower on the month, at 83.7kg. Despite this, the sample weight remained nearly 1.1kg heavier year on year. Carcase weights have continued on their downwards trajectory into December, falling 610g to 81.43kg in the week ended 16 December. In the same period, the average probe measurement has also dropped, falling to 11.2mm in week ended 16 December.

GB weaner prices in both categories have continued to decline in recent weeks. In November, the monthly average price for 7kg weaners fell £1.41 on the month to stand at £41.13/head, while the 30kg weaner price dropped by £1.42, to average £55.52/head.

EU PRICES

In the 4 weeks ended 17 December, an overall decline in the EU average reference price was reported, driven by a significant drop of €1.31/100kg in the most recent week of the period. The EU reference price fell €1.55/100kg over the 4 weeks, to stand at €143.84/100kg in week ended 17 December.

The stability in prices in the first three weeks of the period was likely driven by high demand in the run up to Christmas, matching plentiful supply. However, the upcoming loss of slaughter days and end of the Christmas procurement period likely had an effect in week ended 17 December, contributing to the witnessed price drop.

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Of the individual member states, Germany reported a decline of €3.07 in the most recent week (ended 17 December), to stand at €146.32/100kg. Conversely, the Danish price remained relatively stable, recording a drop of only €0.03/100kg. Meanwhile, French prices dropped €1.00 to €129.00/100kg, and Dutch prices €1.31to €128.19/100kg. Of the key markets, only Spain reported an increase in the week, rising €0.43/100kg, opposing the trend of the past 4-week period.

The trend recorded for the UK was fairly in line with that of the rest of the EU in the 4-week period ended 17 December, with a moderate decline of €0.72/100kg reported. The decline was minimised in euro terms due to some modest strengthening of the pound over the period.

UK SLAUGHTERINGS AND PIG MEAT SUPPLIES

Clean pig slaughterings in November totalled 964.1 thousand head, according to the latest data from Defra, almost 2% higher than the same month of 2016. Despite this, year to date slaughterings remain 2% behind year earlier levels, reflecting lower slaughterings in the first half of 2017.

In mid-November, a major Scottish plant reopened following temporary closure since August. Scottish slaughterings were 28% lower year-on-year in November, following production declines of around 75% in September and October, highlighting the effect of this plant closure. Although Scottish slaughterings remained subdued in November, given the low baseline (3% of UK clean pig slaughter on average), the effect on overall UK slaughterings was compensated by growth in other regions. On a regional basis, slaughterings in England and Wales were up 1% on the year in November, and up 8% in Northern Ireland in the same period.

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November UK pig meat production was 3% higher on the year at 84,200 thousand tonnes, although year to date production remains 1% lower than year earlier levels. In the same period, carcase weights rose a notable 1.4kg to 84.2kg. This was an 800g decline compared to the previous month, potentially signifying the slowing of the trend of exceptionally heavy weights witnessed in the previous few months.

Sow and boar slaughterings were 11% lower on the year in November, at 20,100 head, while year to date slaughterings remain 10% lower at 213,300 head.

UK pork exports grew 7% in October, compared with a year earlier, reaching 16.6 thousand tonnes. With average unit values comparable to 2016 levels, value was up in line with volume at £23.2 million. This growth came despite shipments to China declining a noticeable 31% (940 tonnes) year-on-year, falling from the first to fourth largest UK pork export market. This was the first month since June that UK shipments to China had fallen below year earlier levels. Despite Chinese pork imports overall remaining below 2016 since March, demand for UK product had seemed robust. Whether this decline is the first sign of UK product being affected by the Chinese slowdown remains to be seen. However, Rabobank have recently suggested that there could be some recovery in import demand from China in 2018. This would be from the Eastern and Southern regions where production is declining and a lack of infrastructure means domestic production is not yet competitive.

Nonetheless, in October, exports within the EU more than compensated for the Chinese decline. At 11.8 thousand tonnes, volumes were 22% up on the year. Shipments to Denmark and Germany particularly increased. While from a smaller base, Belgian volumes almost doubled and there was also growth to Sweden, Italy and Poland.

Offal exports also recorded a strong month, growing 20% in volume terms to 7.8 thousand tonnes. Chinese shipments grew a modest 5% (+150 tonnes), and this was supported by shipments to the Philippines more than doubling (+430 tonnes). Despite this, unit prices fell, likely influenced by lower wholesale prices in China this year. As such, in value terms market only increased 9% year-on-year to £7.3 million.

Pork import volumes recorded by HMRC continued to trend behind year earlier levels during the month, at 39.2 thousand tonnes. This was 8% behind the same point last year. Slightly higher import prices meant value was back less than volume, falling only 6% to £79.0 million.

As with previous months, the apparent decline was primarily driven by Danish shipments falling back from the elevated levels of 2016. At 15.5 thousand tonnes, volumes remained well above 2015 levels but were 15% lower than last year. In addition, supplies from Germany, Netherlands, Spain and Belgium also reportedly declined.

Import volumes of other pig meat products also fell on the year during October, with only sausages bucking the trend and climbing 3% (+350 tonnes). Bacon imports remained below year earlier levels, as has been the case throughout much of 2017, falling 14% (-3 thousand tonnes), while processed hams were down 11% (-1.4 thousand tonnes).

FEED MARKET

Grain markets remained flat during December 2017. The UK feed wheat futures May-18 wheat futures contract closed at £142.60 on 27 December, up just £0.10/t from the start of the month. Furthermore, the closing prices for the contract had a range of only £1.45/t throughout December. Similarly, Paris maize futures June-18 prices also showed limited change. The contract gained just £0.12/t over the course of December and closed at £144.63/t on 27 December, again with a narrow closing price range of only £1.99/t throughout the month.

On a global level, production and supply estimates have largely been revised upwards this month. Global wheat production in 2017/18 is now forecast at a record 755.2Mt by the USDA (as at 12 December). This is 3.2Mt higher than was forecast in November and 1.6Mt higher than last season. Following this change, global wheat closing stocks in 2017/18 are also forecast at a record 268.4Mt, 5% higher year on year.

Closer to home, Defra, in their final 2017 UK crop areas and yields report estimate UK wheat production at 14.84Mt. This is 326Kt lower than the provisional production estimate published in mid-October. On a regional basis, the largest downward revision in production is that of the East Midlands, down 148Kt on the provisional estimate. 

Although Vivergo Fuels had originally announced a closure for planned maintenance, a subsequent release stated the bioethanol facility will remain offline for the foreseeable future. The shutdown in part prompted by a fall in bioethanol prices (read more here) and uncertainty regarding future policy. While UK feed wheat demand is likely to be impacted, the actual implications are as yet uncertain.watch this year.

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Global oilseed markets have in general, seen a decline through December. Paris rapeseed May-18 futures closed at £314.51/t on 27 December, down £11.17/t from the beginning of the month. Chicago soyabean futures (May-18) also fell through December, down £9.60/t between 1 and 27 December to £267.75/t. Palm oil prices also saw a decline during the month. The Kula Lumpur palm oil futures contract for Mar-18 fell £12.00/t during December, closing at £464/t on 27 December.

The downward pressure in oilseed markets has mainly been driven by increased global production estimates and more favourable weather in South America. Pressuring palm oil this month has been an increase in production combined with lower exports, following India’s import tax increase on edibles oils.

Global 2017/18 rapeseed production was projected at 72.9Mt in December by the USDA, 0.8Mt higher than in November and heavily influenced by the increase expected in Canada. 2017 Canadian canola (rapeseed) production is now pegged at 21.3Mt by Statistics Canada, compared with 18.2Mt in late August (read more here). This is 9% higher year on year and a new record.

Meanwhile, the FrenchAgriculture Ministryexpect the French 2018 rapeseed area to increase by 9.5%, with winter rapeseed plantings increasing to 1.54Mha. Although this is still below the oilseed rape planted area seen in 2011, 2012 and 2016, it is still a marked increase for Europe’s second largest grower of the crop (by area).

Brazil is the world’s second largest producer of soyabeans and planting of the 2017/18 crop is now generally complete. Although predications are on the whole for lower Brazilian soyabean production in 2017/18, analysts Safras & Mercado have predicted a record year for production at 114.6Mt. Additionally, although the government forecaster, Conab, has predicted that Brazilian soyabean production will be lower than last year, its forecast was increased recently by 1.6Mt to 109.2Mt (4% lower year on year).

CONSUMPTION

The volume of fresh/frozen pork sold in the UK increased by over 2% on the equivalent period last year in the 12 weeks ending 5 November. The average price of pork increased nearly 8% in the same period, and so total expenditure also rose by more than 10%. Considering the increased price of pork, in conjunction with increased volume sales, it would seem that demand is improving.

Despite the price rises, pork remains competitive in comparison to lamb and beef, which might support sales volumes moving into the Christmas period. The ongoing AHDB Midweek Meals campaign may also contribute to pork’s growth, but whether this newly strengthened market position is here for the long run is yet to be seen.

The producer share of the retail pork price declined on the previous month during October to stand at 41%, a decline of almost one percentage point. However, this is still one percentage point above the level recorded this time last year and when compared to historic levels this is still relatively high.

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This pig meat sector UK market update was prepared by:

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Annie Linekar, Bethan Wilkins & Duncan Wyatt
AHDB Market Intelligence

Phone: +44 (0)24 7647 8723/8757/8856

e-mail: Annie.Linekar@ahdb.org.uk,  Bethan.Wilkins@ahdb.org.ukDuncan.Wyatt@ahdb.org.uk  

Twitter: @AHDB_Pork #PorkMarketNews

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