Price recovery prospects remain “limited”

Scope for a significant recovery in producer prices continues to look “limited” according to the latest analysis from Quality Meat Scotland (QMS).

That’s despite several recent changes for the better, in terms of the GB industry, says QMS  senior economics analyst, Iain Macdonald.

“With farmgate prices stabilising on the continent, lower UK prices have seen the gap between the UK and EU average narrow from 30-40% in December to 12-15% in late February/early March,” said Mr Macdonald.

“At the same time, a lift in the value of the euro, due to weaker UK economic growth and the uncertainty caused by the upcoming referendum on the UK’s future in the EU, has also had an impact.

“As a consequence, UK pigmeat has become more competitive in price sensitive markets both at home and on the continent, and currency movements are likely to have made potential margins on exports look more attractive to UK processors.  UK trade data for January indicates that imports fell whereas exports increased strongly compared with a year earlier.

“A further positive for producers, who have seen margins squeezed heavily, is that global prospects for arable crop production continue to look bright and this has helped maintain the downward pressure on feed costs. Indeed, the price of feed grains has been running 10-15% lower than last year, while soyameal is nearly 25% cheaper to buy than in mid-March 2015.”

His conclusion, however, is still broadly negative, due to the fact is that farmgate prices remain significantly lower than last year, with both the average price per kilo and per carcase down by 15% year-on-year.

“In addition,” he said, “with weekly slaughterings in February in the UK level running 4% ahead of last year and the December census pointing to an increase in the female breeding herd in both England (by 1%) and Scotland (by 12%), scope for any significant recovery in producer prices looks limited.”

Get Our E-Newsletter - Pig World's best stories in your in-box twice a week
Will be used in accordance with our Privacy Policy

About The Author