Autumn price slide may not happen this year says QMS

UK and EU pig prices could be set to break with history and avoid an autumn price slide this year says Quality Meat Scotland (QMS) economist, Stuart Ashworth.

“This year, with an expectation of declining production in Europe, coming on the back of a December 2015 sow herd that was 1.8% smaller than in 2014, plus continued strong demand from Asia, history may not repeat itself,” said Mr Ashworth, who is head of economics services at QMS.

Commenting as author of QMS’s latest market report on pigmeat, Mr Ashworth (pictured above) also highlighted the “usual” situation at present of UK producer prices, when quoted in euros, being lower than the European average.

“The GB pig price has enjoyed some strength over recent weeks, climbing to 131 p/kg dwt, an increase of 17% since March,” he said, adding that the European average price has climbed 30% since March to sit some 10% higher than a year ago.

“These relative price movements have resulted in the unusual situation of UK producer prices being lower than the European average, a fact which diminishes the attractiveness of European pork on the UK market and helps to support UK prices.”

Looking at the factors which have been driving the price higher recently, he commented that while pigmeat production across Europe is still running ahead of last year, the gap is narrowing and is expected to dip below last year’s levels in the final third of the year. In the UK, meanwhile, prime pig slaughter numbers dipped below last year’s levels in May and June, although higher carcase weights mean production is little changed from last year.

“Producer price improvement, however, is not then being driven by a reduction in supply,” he said, adding that farmgate prices had, in fact, risen in response to the dramatic changes in the international demand for pork.

This was based largely on China’s return to the market place, which had resulted in a 70% increase in UK pigmeat exports to the country during the first five months of this year, and a 50% increase in the country’s offal imports.

While accepting that as the Chinese sow herd begins to rebuild, and Japan’s herd recovers from the impacts of the PEDv, such demand may eventually “stabilise”, Mr Ashworth added that the current strong demand pull was “unlikely to diminish in the short-term”.

All of which led to his conclusion that the coming autumn could well see a “break” with pig pricing history in the UK.

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