UK - Pig slaughterings up again in August

UK clean pig slaughterings in August were again about 3% higher than a year earlier at 782,000 head. The largest increase was again in Scotland, up by 21% year on year at 52,000 head.  Throughputs in England and Wales were 1% higher at 601,000 head whereas Northern Ireland figures stood at 129,000 head, 7% up on August 2011. Clean pig slaughterings for the first eight months of the year totalled 6.6 million head, also up by 3% on the same period last year.

The August total for slaughterings of sows and adult boars was 21,100 head. This was around 2,400 higher than in August 2011 and follows an even larger increase in July, providing further evidence that some producers are destocking in the face of increased feed costs.

UK pork and bacon imports in July were again lower than a year earlier, although the falls of 7% and 1% respectively were lower than in most recent months. Continuing the trends seen earlier in the year, falling shipments of pork from Denmark, the Netherlands, Ireland and Belgium were partly offset by increased volumes from Germany, France and Spain. The weaker euro meant that unit prices were 3% lower than in July 2011 at £1.92 per kg. The rapid rise of processed imports continued, with sausage volumes up by 5% and other processed pig meat products by 46%.

UK pork exports in July were down by 2% year on year, continuing the recent subdued performance. July was the first full month of pork shipments to China, which reached just over 1,000 tonnes but this was offset by a sharp fall in shipments to Hong Kong.  UK offal exports were also lower in July 2012 than a year earlier. Increased shipments to EU Member States were more than offset by lower shipments to Far Eastern markets. Exports of processed pig meat products were higher but bacon/ham shipments were lower, largely due to a decline in Irish demand.

Full pig herd figures from the UK’s June Agricultural Census are not yet available. However, figures have been published for England, Scotland and Northern Ireland, giving a good idea of the overall situation. In the year to June 2012, the total number of pigs in the UK was up by around 1% to approximately 4.48 million head. Numbers in Northern Ireland and England increased by 2% but Scottish pig numbers were down by 7%. The number of fattening pigs also increased by 1%.

Breeding pig numbers were virtually unchanged overall. Numbers of sows and in-pig gilts were slightly lower, largely due to reduced numbers in Scotland, but maiden gilt numbers were higher. This would normally suggest future expansion plans.  However, since the June census was taken, the rapid rise in feed prices has led to some pig breeders leaving the industry or reducing the size of their herds. If this trend continues, then the size of the breeding herd will probably be lower by the time of the December census, with slaughterings and production set to fall in 2013 as a result.

The recent rally in GB finished pig prices continued during week ended 22 September, with the EU-spec DAPP gaining 1.61p to reach 153.46p per kg. This is the highest level recorded for more than three years and was nearly nine pence higher than a year earlier, when prices were following the downward trend which is typical at this time of year. GB prices are currently being supported by near-record pig prices across the EU, limiting the availability of imports at prices comparable to British pig meat. Estimated throughputs were slightly higher than last week at 166,500 head, similar to the level recorded in the equivalent week last year. The average carcase weight rose to 78.46kg, the highest level since May but still more than a kilogramme lighter than a year earlier.

Once again, there was little change in the weaner market, with the average price up by just 11 pence to £39.11 per head for week ending 29 September. High feed costs continue to suppress prices despite some increase in demand from finishers as pig prices improve. The current price is just over one pound lower than this time last year.

EU pork exports in July 2012 were below their level a year earlier for the second consecutive month. The main driver was a 26% drop in exports to Russia. This may have been due to some traders holding shipments back until after Russia joined the WTO in August to take advantage of lower import tariffs. Higher exports to China were more than offset by a fall in shipments to Hong Kong. South Korea also took less EU pork as its domestic industry continued to recover from the FMD outbreak. In contrast, exports to Japan were up by 39% year on year, while Ukraine was another market which grew strongly.

Offal exports remained below year earlier levels in July. Shipments to Hong Kong/China, the main market, were only down slightly but Russia and the Philippines, the next largest markets took 26% and 19% less offal respectively. Lower trade with Russia also hit EU exports of live pigs, which were 12% lower than in July 2011, continuing the trend for the year to date. Restrictions imposed by Russia led to an 82% fall in shipments, to just 7,000 head.

Soya meal prices have eased in recent days with a combination of factors contributing. The US soyabean harvest is ahead of schedule and early yields have not been as bad as feared. At the same time, planting conditions in South America are good, macroeconomic concerns are returning and the falling dollar has helped reduce prices for European buyers. Wheat futures have remained above £200 per tonne for November movement, although they have eased slightly over the last week.

To read more about this and other developments in the feed market, click here.

Earlier in the summer, the nation celebrated the London 2012 Olympics but which meats did people eat while watching the games? Growth in both expenditure and quantity, up 8% and 9% respectively on the same period last year, made pork the gold medallist. This was ahead of chicken in silver (up 7% in value terms and 5% in volume) and in bronze position was turkey (up 2% and 4%). Lamb was just outside the medals in fourth with a slight fall in expenditure but a 6% increase in the amount purchased, while beef lagged well behind with a 3% fall in spending and an 11% fall in volumes. Sales of those products that gained momentum while the games were on peaked during the second week.

Traditional party foods such as sausage rolls and pork pies might have been expected to perform well but they suffered as price-conscious consumers noticed large year-on-year price increases. Convenience however had not gone away and there were increased purchases of pizza. The improvement in the weather during the Olympic period and the successes of Team GB drove the traditional British summer barbecue as sausages and burgers both recorded growth, particularly in the run up to the final weekend.

A new report published by Rabobank forecasts that world food prices will reach new record highs in 2013, driven by the increase in agricultural commodity prices triggered by droughts in the US, South America and Russia. With food security remaining a sensitive issue in many regions, there may be a return of government interventions, which could further exacerbate food and commodity price volatility.

In contrast to the last commodity price spike in 2008, the global shortage in grains and oilseeds in 2012 is expected to mainly impact on animal feed, squeezing profit margins in the meat and dairy sectors. The long production cycles of these industries mean that the impact on global food prices may be prolonged as herds take longer to rebuild.

The September edition of Pig Market Trends (PMT) was published on Tuesday. As well as the usual coverage of producer prices, slaughterings and production, trade, retail sales and prices, costs of production and other industry news, this month’s edition focuses on the results of the UK and EU pig censuses.

Pig Market Trends is now available free of charge. Subscriptions are available by contacting Emma Whitlock (emma.whitlock@ahdb.org.uk). Recent editions can be downloaded from the BPEX website by clicking here.