UK Pig Meat Market Update

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The February 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.

February 2019

UK PRICES

GB pig prices continued on a downward track in the run up to Christmas, with the average EU-spec APP during December over a penny lower than the previous month at 146.48p/kg. Prices have continued to fall in subsequent weeks, as is normal in the early part of the year, and by week ended 19 January, the APP stood at 143.64p/kg. This is around 3p below the pre-Christmas level and over 7p less than the same week last year. Subdued consumer demand post-Christmas, low EU prices and plentiful supplies on farm, have been suppressing quotes.

The gap between the APP and the SPP widened again in December, as the latter fell more significantly by almost 2p, to average 141.91p/kg. The difference of 4.57p/kg was the largest since July 2014, suggesting that prices for premium pigs have held up more than average in recent weeks. Industry reports also suggest that demand for the “RSPCA assured” pigs was strong in the run up to Christmas, contrasting with weak demand for standard pigs subjected to greater competition from imports. By the week ended 26 January, the SPP had fallen to 138.71p/kg and the year-on-year drop was around 8p.

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Having been higher throughout December, carcase weights started 2019 at record levels, with the average for the SPP sample topping 86kg for the first time in week ended 19 January. This has compounded the increased slaughtering levels, contributing to the higher supplies and lower prices. The average SPP weight of 84.01kg in December was around half a kilo lower than November, as a backlog of rolled pigs cleared. However, it was well up on the 82.65kg recorded in December 2017, perhaps reflecting fewer pigs pulled forward this year.

The GB weaner market has shown some volatility in recent weeks. During December and early January, 30kg prices have varied between £44 and £48/head, but overall the market seems to be following a general downward trend. December’s average price of £45.31/head was £1.75 lower than November’s. Prices remain over £7 lower than a year ago as concerns over feed costs limit demand from finishers. Reflecting this, prices for 7kg weaners have also trended down, with the average in December £1.50 lower than the previous month at £35.33/head.

EU PRICES

EU pig prices were flat from the start of November to the end of 2018. The EU average reference price averaged €135.65/100kg in December, almost exactly the same as in the previous month. The average price ended the year at around €135.47/100kg, over €16 lower than the peak in early September and €4 down on the end of 2017. The price has resumed a slight downward trend in January. Consumer demand is still apparently weak, however with a declining breeding herd tighter supplies may be ahead, and Chinese import demand may start to pick up.

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EU pig prices were flat from the start of November to the end of 2018. The EU average reference price averaged €135.65/100kg in December, almost exactly the same as in the previous month. The average price ended the year at around €135.47/100kg, over €16 lower than the peak in early September and €4 down on the end of 2017. The price has resumed a slight downward trend in January. Consumer demand is still apparently weak, however with a declining breeding herd tighter supplies may be ahead, and Chinese import demand may start to pick up.

UK SLAUGHTERINGS AND PIG MEAT SUPPLIES

UK pig meat production totalled 71,900 tonnes in December, which is a slight increase (+1%) compared to a year earlier. This brings production for 2018 to 926,700 tonnes, 24,100 tonnes higher (+3%) than in 2017. This is a result of higher slaughterings for both clean pigs and sows and boars.

Clean pig slaughterings in December were similar to the previous year overall, at 834,800 head. However, in England and Wales throughputs were down by around 10,500 head (-2%) compared to a year earlier. This counteracted an increase in slaughterings in Northern Ireland, up 11,700 head (+9%) in December, although slaughterings in Scotland were down by 500 head (-2%). This brings UK total slaughter for the year to 10.7 million head, a 2.5% increase (+257,500 head) compared to 2017 and the highest annual throughput since 2000.

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Carcase weights dropped slightly in December compared to the previous month, however weights were nonetheless above the 2017 level for the first time since August. Averaging 83.2kg in December, the measure was 630g higher than the previous year. This is most likely indicative of fewer pigs pulled forward because of poor demand from processors over the December period. 

Sow slaughterings also picked up slightly in December, standing 2% (+400 head) higher than the previous year at 16,900 head. Sow slaughterings in the year were therefore 9% higher (+22,200 head) than in 2017 at 258,800 head. However, it is worth noting that sow slaughterings in 2017 were unusually low, especially at the start of the year, meaning an older breeding herd drove higher slaughter. Nonetheless, the slaughter rate in the second half of the year is perhaps slightly above usual expectations, suggesting the worsening financial situation may have led some producers to reduce their herd size.

During November 2018, UK exports of fresh/frozen pork continued to record year-on-year growth (+5% or 900 tonnes), reaching 19,500 tonnes. Exports to China have continued the trend set in the past couple of months, recording an increase of 81% year-on-year, to 4,900 tonnes. Shipments to Germany and Ireland also recorded increases, while Hong Kong and Denmark recorded declines.

Average prices were also a little higher than year earlier levels, reflecting increasing high value trade with the US. This meant the overall value of fresh/frozen pork shipments was up 7% at £26.4 million.

Looking at pig meat overall (including offal), exports for the month also rose (+3% or 1,000 tonnes), to 31,800 tonnes. There was some switching in products though compared to year earlier levels. Shipments of bacon and processed pork both recorded increases, though offal recorded a decline.

In November, UK imports of fresh/frozen pork were similar to the previous month, at 43,700 tonnes, according to the latest data from HMRC. This is a significant year-on-year rise of 13% (5,000 tonnes). In the month, all major suppliers increased shipments, which contributed to this overall growth. EU pig prices were significantly lower than UK prices during the month, encouraging these higher import levels. The latest Porkwatch data also suggests the percentage of British pork facings in GB retailers was declining around this time.

Imports of sausages and bacon both recorded little change year-on-year, while imports of processed hams increased by 23%, to 14,700 tonnes. Overall, this meant total UK pig meat imports (including offal) rose to 91,300 tonnes, up 9% on the year. However, in value terms this was only a 3% annual increase, totalling £222.3 million.

FEED MARKET

Grains

UK feed grain prices made substantial gains in December on the back of Brexit uncertainty, which pushed the value of sterling lower. As we entered the New Year, the direction of prices shifted, sterling has strengthened considerably recently, pushing UK grain prices lower. The US federal shutdown has also kept markets suppressed, with no new data coming forward to lift the market.

The picture for global exports has also been important for grain prices. Strong exports of Russian wheat had acted as a ceiling for global grain prices. However, exports from the nation have slowed of late. While this would ordinarily be supportive of prices, there is still a high volume of wheat to export globally, particularly by the US and the EU.

The results of the AHDB early bird survey (EBS) of UK cropping intentions were released in December. The survey highlighted a 4% rise in the area intended to be planted to wheat in the UK and a 14% rise in the area intended for winter barley.

At a global level, estimates for EU cereal production for 2019/20 were released by Stratégie Grains In January. Production of cereals in the EU is forecast to grow by 11% in 2019/20. This has supressed new crop (2019/20) prices.

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Proteins

Both UK delivered rapeseed prices and Paris rapeseed futures prices (nearby) decreased over the month.  A strengthened sterling has recently pushed Delivered rapeseed prices lower still. Soyabean prices fell over the course of the last month. Reduced production forecast for Brazil were outweighed by the lack of progress in the US/China trade talks.

The soyabean harvest in Brazil is underway, and will be watched closely with regard to global soyabean availability and prices.

The area intended to be planted to oilseed rape in the UK for 2019 harvest is forecast by the EBS at 582Kha, down 3% from the year previous. Planting this season has been affected by poor establishment conditions, and cabbage stem flea beetle damage. As such, the final planted area may be lower than expected.

The rapeseed area in Western Europe also looks set to decline, this should support new crop rapeseed prices. That said, there has been an increase in plantings in Eastern Europe, which could support any shortfall in EU supplies.

CONSUMPTION

During the 12 weeks ending 30 December, total primary meat retail sales remained steady on year earlier levels, according to the latest data from Kantar Worldpanel. Within this, some categories performed more strongly than others did. Of course, the most recent period includes the all-important Christmas period.

Retails sales volumes of fresh and frozen primary pork recorded a 4% increase year-on-year, although declining shelf prices meant that the value remained stable. Chops/steaks and shoulder-roasting joints, which performed strongly, drove the overall growth. Although, leg roasting joints declined in volume.

The picture was less positive for other pig meat products. Bacon sales declined 3% in volume compared to year earlier levels, and a 4% drop in average prices meant the value of the market was down a noticeable 7%. Sausages remained stable in volume terms, while ham recorded a modest decline, and both these categories recorded falling prices. Overall, therefore, while total pig meat sales were stable on the year during the period, the value of the market declined 3%.

Similarly, for the 52 weeks ending 30 December, total pig meat protein sales were very similar to year earlier levels. Reflecting their popularity over the summer, sausages recorded an increase of just over 1% in volume. However, a 1% decline in volume for primary fresh and frozen pork countered this. Value remained somewhat flat compared to 2017, with an increase in sausage prices counteracted by lower prices for bacon.

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This pig meat sector UK market update was prepared by:

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Rebecca Oborne, Bethan Wilkins & Duncan Wyatt
AHDB Market Intelligence

Phone: +44 (0)24 7647 8631/8757/8856

e-mail: Rebecca.Oborne@ahdb.org.uk, Bethan.Wilkins@ahdb.org.ukDuncan.Wyatt@ahdb.org.uk  

Twitter: @AHDB_Pork #PorkMarketNews

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