United Kingdom Pig Meat Market Update. May 2012

Transcription

1 United Kingdom Pig Meat Market Update May 2012 UK PRICES Having fallen throughout the first two months of 2012, deadweight pig prices have improved seasonally in recent weeks on the back of some tightening of supplies and firm demand. The DAPP increased steadily week-on-week in March, reaching an average of p per kg, almost two per cent higher than the February average and four per cent higher than in March This upward trend has continued into April, with the euro-spec DAPP reaching p per kg mark in the week ended 21 April. With UK prices recovering, EU prices largely stable and the pound strengthening against the euro, the gap between UK and EU pig prices widened during March and into April. This came after the EU reference price was briefly above the UK price at the start of March. By week ended 21 April, the gap had increased to over eight pence per kg, a larger gap than for much of the past six months. p /kg dw 170 GBFinished Pig Prices p/kg dw 170 Comparison of UK and EU reference prices UK EU Jan FebMar Apr May Jun Jul Aug Sep Oct Nov Dec 110 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 p/kg dw GB Cull Sow Prices per head 65 GB Weaner Prices

2 The seasonal decline in carcase weights of pigs in the DAPP sample continued in March; the average dropped to 79.11kg, one per cent down on the February average and marginally lower than year earlier levels. This decline has continued in the first few weeks of April. The average probe measurement also fell between February and March to stand at 10.8mm and continued to decrease in April. The average weaner price started to follow the upward movement in the finished pig market between February and March, with prices picking up by two per cent to per head. This March price was eleven per cent higher than its level a year earlier. However, prices have since stabilized again as high feed costs continue to limit the number of places available with finishers. Tight supplies on the continent continued to drive up GB cull sow prices. Between February and March the GB average rose by nearly eight per cent to stand at.83p per kg dw, 32 per cent higher than year earlier levels. Prices peaked at the end of March at nearly 125p per kg, the highest price recorded since October 2008, before easing back due to reduced demand over the Easter holiday period. EU PRICES AND EXCHANGE RATES The EU average pig reference price increased for the second consecutive month to reach per kg dw in March. This average is two per cent higher than the February average and eight per cent higher than in the corresponding month of Prices have continued on a slow upward trend in April, reaching per kg dw in the week ended 22 April, the highest price seen since October However, this was offset by the weakness of the euro, so the EU price was little changed in sterling terms. With markets increasingly confident in the state of the UK economy and concerns remaining about the Eurozone economy, the pound strengthened considerably against the euro from late March through most of April. During this period, the pound rose from around 1.20 to nearly 1.23, which represents an 18 month high. p/kg dw Comparative EU pig prices (as at 22 Apr) +1% +2% -2% -7% -3% +0% +4% +1% +3% -0% 110 DK DE ES FR IT HU NL POL UK EU-27 Figures at top of columns show % changes in 4 weeks to 22 Apr

3 EU weaner prices have continued to gain momentum in March with the EU average price reaching a record level of per head, the highest figure recorded since the expansion of the EU in This March average was four per cent higher than the February figure and 24 per cent up compared with year earlier levels. These high prices have been maintained in the first few weeks of April. The steady increase in EU cull sow prices also continued throughout March and in the first few weeks of April; with prices reaching levels last seen in UK SLAUGHTERINGS AND PIG MEAT SUPPLIES UK clean pig slaughterings in March 2012 totalled 771,000 head, two per cent higher than in March Throughputs were higher in all parts of the UK, with two per cent rises in both England & Wales and Northern Ireland and a marginal rise in Scotland. The latter contrasts with recent months when Scottish throughputs have been higher, perhaps reflecting the reduction in the Scottish herd recorded in the December census. Nevertheless, the number of pigs slaughtered in Scotland in the first quarter of 2012 was 11 per cent higher than a year earlier. Across the UK, the total number of clean pigs slaughtered in the first quarter of the year was two per cent up year on year at 2.48 million head. Slaughterings of cull sows and boars during March totalled 20,800 head, almost all in England. This was about three per cent higher than AHDB s estimate for GB slaughterings in March Throughputs for the year remain five per cent above year earlier levels, despite a decline in February. % change UK clean pig slaughterings head Estimated GB weekly throughputs Sterling - euro exchange rate kg Average carcase weights Jan Jun Nov

4 The average clean pig carcase weight during March was slightly lower than a year earlier at 79.0kg. The average carcase weight for cull sows and boars was 149kg, slightly higher than a year earlier. The net result was that total pig meat production in March was two per cent higher than a year earlier at 64,000 tonnes. Total production for the year to date was also up two per cent at 206,000 tonnes. During February 2012, UK imports of fresh and frozen pork were at their lowest level for over nine years. The total of 22,900 tonnes was 19 per cent lower than in February 2011 and the last month with a lower total was December The fall would have been even sharper but for increases of over 30 per cent in shipments from both Germany and Spain. Denmark remained the largest supplier, despite a fall of nine per cent. Big losers included the Netherlands, Belgium, Ireland and France, all of which shipped more than a third less pork than a year earlier. The reduced volumes came despite unit prices being only two per cent higher than a year earlier at 1.85 per kg. The recent trend towards boneless cuts continued, with shipments up by three per cent year on year, with fresh shipments up by nine per cent. Between them, Denmark and Germany supplied over half of fresh boneless cuts, with volumes from the latter more than doubling. In contrast, imports of bone-in cuts were 29 per cent lower than a year earlier. Loins were particularly affected, with fresh/chilled imports little more than a fifth of their level a year earlier. Bacon imports recovered slightly from January s low point during February but were still seven per cent lower than a year earlier. Again, an increase in shipments from Germany, in this case up 31 per cent, mitigated falls in supplies from elsewhere, particularly the Netherlands which shipped 22 per cent less bacon than in February The fall in imports of pork and bacon was partly offset by rising imports of processed pig meat products. Processed imports were 43 per cent higher than a year earlier, driven by major growth in shipments from Ireland, which nearly quadrupled and Denmark, nearly trebled. Between them, these two countries accounted for nearly 70 per cent of shipments, having only been the fourth and fifth largest suppliers a year earlier. Exports of fresh and frozen pork from the UK during February 2012 were six per cent above year earlier levels at 12,000 tonnes. This continues the upward trend of recent years. The growth was driven by an increase of over 50 per cent in shipments to Hong Kong, which was again the largest market during the month. There was also strong growth in many smaller markets but Germany, Ireland and the Netherlands all took less British pork. The growth was down to frozen shipments, which were 35 per cent higher than a year earlier. In contrast, fresh and chilled exports were eight per cent lower. Bacon exports were also higher, up 11 per cent year on year, despite lower shipments to Ireland, the primary market. However, after a sharp rise in January, offal exports were only three per cent higher than in February 2011 with a sharp fall in shipments to Hong Kong offset by growth elsewhere. FEED PRICES Old crop UK LIFFE wheat futures, for May 2012 delivery generally strengthened throughout April. From the low point of per tonne recorded in the first week of the month prices finished trading on Friday 27 April at per tonne. These increases came as the supply situation towards the end of the season appears to be tight. This has been further exacerbated by increased demand for maize from China.

5 New crop futures have eased across the month as reports from North America indicate increased grain plantings while the rain in Europe has eased some crop concern. UK LIFFE wheat for November 2012 delivery started April at per tonne but the latest price for Friday 27 April indicated a fall of almost 6 at per tonne. Further downgrades to South American soya crops continue to fuel increased protein prices. Latest indications are that the Argentine soyabean crop for 2011/12 will be 6 million tonnes lower than the 2010/11 season at 43 million tonnes. Amid these concerns Chinese demand remains robust and is adding further fuel to the price rises. UK FEMAS soyameal prices, ex-mill Liverpool, were quoted at 376 per tonne in week ended 27 April, an increase of over 20 per tonne since the start of the month. Rapemeal prices have also recorded a considerable uplift, reaching 215 per tonne in the latest week, 15 higher than at the end of March. European 2012/13 oilseed rape production is expected to decline to 18.2 million tonnes, compared with 19.1 million tonnes in 2011/12. This means that a four per cent increase in imports will be needed to meet demand. Increased Canadian oilseed rape planting intentions - up 8% from last year - may potentially meet increased EU import requirements. However, Canadian oilseed rape crushing has increased by 12% this season, which may impact export availability. In their latest report the International Grains Council reduced their forecasts of 2012/13 world wheat production, almost entirely due to adverse weather in the EU which they expect to have had an impact on crops. Global maize forecasts were left unchanged. The key points were: The estimate of world wheat production for 2012/13 has been reduced by five million tonnes from last month to 676 million tonnes, 19 million tonnes below the 2011/12 crop. World wheat consumption is expected to fall by 3 million tonnes as increases in food and industrial use are outweighed by decreases in feed demand. World wheat stocks now are estimated at 206 million tonnes, down 2 million tonnes from the previous forecast and 4 million tonnes lower than 2011/12. World 2012/13 maize production and demand figures have remained unchanged from last month at 900 million tonnes and 893milltion tones, respectively (865Mt and 869Mt in 2011/12). In the UK, April was wetter and colder than the long term average, alleviating drought concerns and putting cereal crops in a 'very good' condition, according to ADAS. Cooler temperatures slowed growth in April so crop progress is now 'normal' for this time of year, compared with the end of March when they were ahead of normal. Almost all spring barley (96 per cent) has been planted and has emerged in good condition. Disruption from on-going rain is not currently a severe concern for UK crops.

6 UK feed wheat physical and futures prices /tonnedelivered Physical prices Futures prices Jan-11 Jan-12 Jan-13 UK soya prices /tonne Hipro ex-mill Liverpool Jan-10 Jun-10 Nov-10 Apr-11 Sep-11 Feb-12 p/kg dwt Jan 10 Estimated average cost of pig meat production Jan Apr 2012 Average COP Apr 10 Jul 10 CONSUMPTION DAPP Oct 10 Jan 11 Apr 11 Jul 11 Oct 11 Jan 12 Apr 12 The sustained rise in the price of feed ingredients is also reflected in the price of compound pig feed. As a result, the estimated average cost of pig meat production rose by over four pence per kg between February and March and a further two pence rise is anticipated for April. Despite some recovery in the DAPP, the gap between the cost of production and the finished pig price rose to 21p per kg in March and is likely to remain around 19p per kg in April. This is equivalent to a loss of around 15 per pig. In the 12 weeks to 18 March 2012, consumer expenditure on fresh and frozen pork was five per cent higher than in the same period a year earlier, but the amount purchased was down by nearly four per cent. Belly and loin roasting joints were the only cuts to have increased purchases, up 20 and 12 per cent respectively. Reduced promotional activity on roasting joints has driven declines, with leg joints down over 28 per cent compared to the previous year and shoulder nearly 10 per cent lower. Less promotional activity has meant a nine per cent increase in the average price paid by consumers and meant that expenditure has remained positive. In the latest 4-week period, fresh and frozen pork volume purchases were nearly two per cent lower than a year earlier. Expenditure continued to rise, up four per cent as the prices paid were higher. All cuts were purchased in lower quantities except for belly. Leg and shoulder roasting joints continued to have the largest year on year declines, down 13 and seven per cent respectively. Belly has prospered through increased price reduction activity by the major retailers combined with its already strong value for money credentials. Despite the decreased purchases during early 2012, pork has resisted the more significant decreases that beef and lamb have experienced. In the latest 12 weeks, expenditure on bacon was up by six per cent year on year and the amount purchased was nearly two per cent higher. Rashers have driven increased purchases, being up by three per cent. Although from a relatively small base, premium tier rashers had the strongest purchase growth, up 14 per cent. During 2011 joints enjoyed significantly increased purchases, appealing to consumers looking to switch to cheaper protein alternatives for the evening meal

7 occasion. This year, bacon joints have had slight year on year declines, struggling to repeat the growth enjoyed last year. Purchases of sausages and sliced cooked meats were also higher during the 12 weeks to 18 March 2012 than a year earlier. Sausage sales were up one per cent, while four per cent more sliced cooked meats were purchased. Price rises were more modest than for bacon and pork, meaning that expenditure rose by three per cent for sausages and five per cent for sliced cooked meats. Trends in retail meat purchases (period ended 18 March 2012) 4 weeks 12 weeks 52 weeks 2012/ / /11 Q E P Q E P Q E P % change compared with a year earlier Fresh and Frozen Meat, Poultry and Bacon Pork Belly Chops Steak Leg Roasting Joint Loin Roasting joint Shoulder Roasting joint Bacon Beef Lamb Poultry Processed products Pork Sausages Fresh Pre-packed Pork Pies Fresh Pre-packed Sausage Rolls Pork Chilled Ready Meals Pork Sliced Cooked Meats Q = quantity purchased, E = expenditure, P = price Source: Kantar Worldpanel This pig meat sector UK market update was edited by: Stephen Howarth Senior Analyst AHDB Market Intelligence Phone: +44 (0) stephen.howarth@ahdb.org.uk The United Kingdom pig meat situation and outlook is analysed in more detail in Pig Market Trends, published monthly. For further information contact: Dorian Harris on +44 (0) or dorian.harris@ahdbms.org.uk 2011 AHDB Meat Services. All rights reserved.