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GB pig prices are easing earlier than normal

PW ReportersBy PW ReportersJuly 1, 20144 Mins Read
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Producer pig prices have started to ease earlier than would be expected this year, according to Quality Meat Scotland’s head of economics services, Stuart Ashworth.

He said that pig prices tend to show a seasonal profile, in line with other livestock prices. In general, pig prices tend to climb from February to an annual high in late July or early August, before falling back towards October and November and running flat towards the turn of the year.

“This earlier movement in price means that although the producer price remains historically high for the time of year, it’s about 3% lower than this time last year,” Mr Ashworth said.

A number of factors are playing on the market, he added, but the key difference in the UK market compared with this time last year is an increase in the number of pigs reaching abattoirs and slightly higher carcase weights. 

“Recently released slaughter numbers show the UK kill in May was 2.5% higher than last year and, with carcase weights 2kg higher than last year, production is clearly substantially higher,” Mr Ashworth said. “With the December 2013 census reporting an increase in piglets on UK farms at that time, this increase in volumes reaching abattoirs is not unexpected.”

With the December census also suggesting a modest increase in sow numbers, this slightly better supplied market is likely to remain a feature of the market in the medium term. However, he said, although there may be modest movement in supplies they still need to be put in the context of being below the levels seen five years ago.

“International trade can also play a part in the market and trade data for the first four months of the year show a small net increase in imports of pork, bacon and ham,” Mr Ashworth said. “The current strength of sterling additionally makes these imports from Europe more competitive.”

By adding to overall supplies, he said this puts some pressure on prices unless consumers are favouring pigmeat. 

“Unfortunately latest market research data on consumption of pork, bacon and ham reflect what has been happening across the wider red meat market – lower consumption,” Mr Ashworth said. “During the 12 weeks to the end of April, pork consumption is reported to have fallen 3.5% compared to the same period last year.”

Bacon consumption has also eased. However, unlike other meats, consumption of pigmeat has eased although pork retail prices haven’t moved as fast as some other meats, making pork more competitive on retail shelves. Latest information from the Government’s office of National Statistics shows pork retail prices easing during May to stand less than 1% higher than 12 months ago, while beef retail prices are five percent higher.

With about 50% of annual UK supplies of pigmeat being imported, Mr Ashworth pointed out that developments on the wider European and global market can significantly influence the UK pigmeat market. In this respect, disruption to trade between the EU and Russia, which took about 25% of all EU exports in 2013, has affected the EU market in the past six months. This disruption was created by Russian restrictions following the discovery of African Swine Fever in Poland.

“With the loss of this trade, European pig prices fell significantly in the first quarter of the year,” he said. “Such is the importance of this market, the EU instigated a dispute resolution process with the World Trade Organisation in April. However, prices quickly recovered as the EU took advantage of the disruption to wider global supplies created by the presence of the PED virus in North America, to grow exports to Asia.”

According to Mr Ashworth, the medium-term prospects for the pig sector remain positive.

“As a whole, the EU is expected to be slightly less well supplied with pigmeat during 2014 than last year and that should hold prices firm,” he said. “A swift resolution to the EU application to the WTO in respect of Russian trade should help prices and sentiment. However, with Russian consumers reported to be facing retail prices for pork 2.5 times higher than last year, the situation of trade between Russia and the EU may be resolved more quickly than expected.”

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