Eurozone issues could have pig sector implications

The rising value of the pound against the euro, coupled with a host of other eurozone issues, could have price pressure implications for pig markets, according to BPEX.

Noting that the pound has hit a seven-year high against the euro, BPEX said that the current eurozone troubles could lead to a further downward pressure on pig prices.

“A strong consumer preference for British pigmeat has helped to maintain the price premium for UK pigs compared with EU prices,” said BPEX. “However, the premium increases further with a weakening euro and this could mean that the downward pressure on UK pig prices of recent months will continue, at least in the shorter term.”

With deflation, low growth and renewed political uncertainty following the Greek election result, the euro has fallen against all major currencies. By January 27, in fact, the single currency was at a seven-year low against the pound at €1=£0.75 and an 11-year low against the dollar at €1=$1.13.

“For UK businesses, this means that exports will be less competitively priced, while imports from the EU will be relatively cheaper,” said BPEX. “However, with the euro falling against most major currencies, it is unlikely that the UK will be inundated with imports from the Eurozone. Exports from the area will be more competitively priced in a number of markets, particularly for products priced in dollars (such as wheat) which are traded globally.

“There is, however, a further risk from the weakening European economy of falling demand, particularly for higher quality, higher-priced products as household income and consumer confidence are both impacted.”

All of which, BPEX added, could have implications for the UK pigmeat sector.

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