Bpex market report

EU pig prices still rising
UK Pig Prices
Fall in Danish and Dutch pork exports
US pig herd set to contract
Feed Market Update
Lower Italian pork imports
EU Commission forecasts lower production in 2013

EU pig prices still rising
The rapid rise in EU pig prices which began in mid July has continued in recent weeks. By week ended 23 September, the average reference price had reached €190.67 per 100kg, having risen for 10 consecutive weeks, adding nearly €23 (14 per cent) in that time. With the exception of three weeks during the 2001 FMD outbreak, this is the highest price ever recorded. The latest price is €36 per 100kg higher than in the equivalent week last year and almost €50 more than two years ago. Rising prices have been driven by tight supplies across Europe, with fewer pigs available and, in some Member States, lower carcase weights.

This year’s trend contrasts with the normal seasonal pattern of falling prices during September, although last year prices were stable due to strong export demand. The rise in prices has taken the EU average price above the UK reference price since the end of August, with the gap reaching as much as €5 per 100kg at one stage, the largest gap since January 2009. Reference prices in many Member States are now higher than the UK price, although this is not true of some of the major suppliers of UK pig meat imports, notably Denmark and the Netherlands. In the last four weeks, the EU average price has risen by over four per cent, with even sharper rises in Denmark and France, among others.

UK Pig Prices
Pig prices continued to climb up as the EU-spec DAPP reached 154.75p per kg for the week ended 29 September. This was an increase of 1.29p since the previous week and wa almost 10p more compared with the same week last year. Generally prices tend to fall from the summer before stabilising again during the Christmas period. However, this year the trend has not been followed as tighter supplies on the continent have resulted in higher pig prices, which have begun to impact GB prices. Estimated throughputs totalled 165,700 head, marginally lower than last week and around 1% lower than the same week last year. The carcase weight was a little higher than the previous week at 78.7kg.

The average price of a 30kg weaner has continued to recover after the fall over the summer as confidence builds in the future direction of finished pig prices. At £39.90 per head for the week ending October 6, weaners are 79p more expensive than last week. This is almost identical to the price a year earlier, which was the lowest level recorded in 2011.

For the week ended 22 September, cull sow prices picked up again reaching an average of 113.51p per kg. This was up over a penny from last week but a bigger annual change of nearly 7p. The estimated throughputs eased slightly to 5,700 head, although this figure was still much higher than the same week last year.

Fall in Danish and Dutch pork exports
Denmark and the Netherlands, two of the leading suppliers of UK pork imports, exported less pork in the first half of 2012 than in the same period last year. The Danes exported 7% less, with declines in trade with both other EU Member States and non-EU markets. Lower domestic pig meat production was the main driver of the fall. Trade to Denmark’s leading customer, Germany, was almost unchanged but shipments to other major EU markets, including the UK, were lower. Nevertheless, Denmark remained the largest supplier of pork to the UK. Trade with non-EU markets was also down as Japan reduced its in-take by 9% while demand from the Russian market declined by 21%.

Total Dutch pork exports were down 14% year on year, partly due to a small contraction in domestic pig meat production.  There were large reductions in shipments to all the main EU markets, many of which were impacted as the ongoing economic crisis forced consumers to become more cautious in their spending habits.  Shipments to the UK decreased by 29%. Outside the EU, there was a reduction in shipments to South Korea but access to Australia saw it emerging as a significant market for Dutch pork.

US pig herd set to contract
According to the latest figures published by the USDA, the US pig herd on 1 September was marginally higher than a year earlier at 67.5 million head. This was also 3% higher than on 1 June 2012, which is the normal seasonal pattern. Similarly, there was a small increase in the number of pigs available for slaughter, with more pigs in the heaviest weight band but fewer in lighter weight bands, suggesting a fall in slaughterings is likely later in the year. Breeding pig numbers were also marginally lower than last year at 5.79 million head.

Sow farrowings for June to August stood at 2.89 million head, 1% lower than the same quarter last year. However, as the average number of pigs weaned per litter reached a record high of 10.13, the pig crop was little changed. Looking ahead, the future for the US pig herd is looking more pessimistic, as producers intend to farrow 2.85 million sows during the autumn quarter, 3% lower than the actual farrowings during the same period in 2011. Intended farrowings for the winter quarter are lower still at 2.82 million sows, which would make it the lowest quarterly figure for nine years. This indicates that producers are lacking confidence, due to the recent drought and rising feed costs and suggests lower supplies and, hence, higher prices next year.

Feed Market Update
Having eased a little recently, Chicago maize prices have increased over the last week as latest USDA figures put US maize stocks at 25Mt, down 12% on 2011 and lower than expected. Wheat stocks were also lower and the IGC has also reduced its 2012/13 global wheat production forecast. Despite this, UK feed wheat futures were little changed from a week ago, trading at around £200 per tonne for November delivery. Delivered prices for feed wheat were generally lower last week.
Soyabean prices have also eased back as the US harvest continues to make good progress and prospects for the South American crop still look favourable. In addition soyabean prices may be pressured on news that palm oil hit the lowest price level for three years on Tuesday.
To read more about this and other developments in the feed market, click here.

Lower Italian pork imports
During the first half of 2012, Italy imported 5% less fresh and frozen pork than during the same period last year. Italy is the largest net importer of pig meat in the EU and shipments during the six months totalled 453,000 tonnes. Reduced production across most Member States led to lower shipments, with the economic situation in Italy also weakening demand somewhat. The only major supplier which sent more pork to Italy was Spain, which had increased supplies due to a rise in slaughterings. Its shipments rose by more than a quarter.

Italy is also a significant importer of live pigs, with shipments up by six per cent to 584,000 head in the first six months of 2012. Weaners made up three-quarters of the total and numbers were up by 15 per cent, partly compensating for lower numbers from Italian breeders due to the decline in the breeding herd. The growth was largely due to increased shipments from Denmark. Slaughter pig imports were down 11 per cent to 135,000 head.

EU Commission forecasts lower production in 2013
The EU Commission’s latest Short-term Outlook forecasts a 0.4% fall in pig meat production for 2012 but a larger fall, of over 3%, the following year. This is partly due to the contraction in pig numbers over the last two years. In addition, the publication forecasts that new welfare rules which come into force at the start of the year would lead to a further reduction in the sow herd and higher feed costs would further depress production. Exports in 2012 are forecast to be marginally higher than in 2011 as global demand remains strong but lower supplies would lead to a 15% fall in shipments next year. Pig meat consumption is expected to decrease in both years, with a 2% fall in 2013.
Overall EU meat production in 2012 is forecast to decrease by 0.6%, with a 1.3% fall in 2013. In both years, rising poultry meat production would partly offset lower quantities of pork, beef and sheep meat.

Farming News Daily Supporting British Pig Farmers

Source: bpex.org