Pig farmers appear to be gearing up for increased production in 2015 according to Quality Meat Scotland (QMS) economics analyst Iain Macdonald.
While acknowledging there has been a definite “cooling in pig prices over the past two months” due to the extra availability of pigs on the market and the influence of the strong pound, Mr Macdonald (pictured) said these factors will have been “manageable for most producers” given the easing of feeding costs.
Comparing feed costs now with those of late March 2013, the last time producer prices were at current levels, showed a 45% decline for wheat and barley prices and a 12% decline for soyameal. In addition, taking a longer-term view, UK sow slaughterings have been 3% lower in the first seven months of 2014, compared with a marginal contraction of the UK sow herd reported in December.
“This suggests that producers are rebuilding herds to take advantage of the better margins achievable due to much lower feed costs,” said Mr Macdonald. “Furthermore, considerable investment carried out in recent years has seen each sow producing more piglets, suggesting additional production growth is likely in 2015.”
His upbeat view of the future, however, followed a current assessment of the sector which showed farmgate prices having fallen by more than 6p/kg from a seasonal peak of 164.5p/kg dwt at the beginning of June. He also said the seasonal decline had come earlier this year and that the increase through the spring and into summer was much less pronounced than in previous years. As a consequence, prices had fallen 9.5p/kg (5.5%) behind last year’s levels.
“One likely contributor to the cooling of prices has been strong domestic production,” said Mr Macdonald. “Defra slaughter data for UK abattoirs showed year-on-year increases in the prime pig kill of 2.5% in May, 3.5% in June and then 0.5% in July, with the weekly average kill rising each month.”
He also commented that the strengthening of the pound, by around 6.5% against the euro year-on-year, was another influence on the UK market.