United Kingdom Pig Meat Market Update

Tag : Frozen Pork Meat

- Cull sow prices have increased particularly sharply, and are alsoat an 11-year high. The average price in the week ended 24 May was98p/kg dw, 8p more than four weeks earlier and 36p above the levelof a year earlier. Nearly all sow meat produced in the UnitedKingdom is exported, and sow prices have therefore got a majorboost from the depreciation of sterling. However, the furtherincrease in May was mainly due to tighter sow meat suppliescompared with earlier in the year.

- Economic concerns about the UK economy, together with aspill-over effect from the general weakness of the US dollar, havepushed sterling sharply lower against the Euro over the past fewmonths. In May, the Euro was worth an average 79p, compared with68p a year earlier. The weakening in the value of sterling willhave made UK imports dearer and exports more competitive.

- Producer prices have increased more in many Continental EUcountries than in the United Kingdom. Lower slaughterings in anumber of countries are supporting market price levels. The arrivalof warmer weather in Europe also prompted the beginning of thebarbecue season in May.

- The EU-27 average reference price in the week ended 25 May wasnine per cent higher than four weeks earlier. Spanish prices wereunchanged but there were increases in all the other major producingcountries. Prices in Germany, Hungary, Italy, the Netherlands andPoland all increased by between 14 and 17 per cent over thefour-week period. The EU-27 price was 18 per cent higher than ayear earlier in Euro terms but 38 per cent higher in sterlingterms.

- Relatively stronger EU prices have led to the disappearance ofthe UK premium over the EU-27 price in recent months. The premium,which averaged 12p/kg in 2007, disappeared in March. At the end ofApril, the UK reference price averaged 3p less than the EU-27price. UK prices averaged 13.9p more than Danish prices (averaged24.0p in 2007) and just 2.9p more than the Dutch price (19.8p in2007).


Russian Meat Ban
At the end of April, Russia banned imports of meat from a numberof EU meat plants. The reason given was the presence of residuesfrom the antibiotics doxicyclin and tetracycline, which Russia doesnot allow. Over 30 establishments in the EU are now affected,mostly producing pig and poultry meat. Imports from some companiesin the United States, Canada, Brazil and Argentina have also beenbanned indefinitely. In 2007 the EU exported 233,000 tonnes offresh and frozen pork to Russia.

UK Slaughterings and Production
- In the first four months of 2008, total clean pig slaughteringswere two per cent higher than a year earlier, due to a combinationof continuing improvements in sow productivity and, in January, theclearing of the backlog following foot and mouth disease (FMD).Provisional forecasts for May, however, suggest a fractionaldecline in total slaughterings

- Since April, average weekly throughputs have tended to movelower. This trend is likely to continue into the second half of2008 due to the impact of the decline in the national breeding herdsince June 2007.


- Sow cullings have been at high levels this year, a strongindication that the June 2008 livestock survey will record afurther contraction in breeding sow numbers. High feed costs andindustry losses are the prime drivers of these trends. InJanuary-March 2008, sow cullings totalled 37 per cent more than inthe first quarter of 2007. The increase would have been even more,had it not been for the early Easter. Cullings moved lower in Apriland May, although they were still running above 2007 levels.

Feed Prices
- Delivered feed wheat prices have fallen by around £30/tonnesince the end of March to average £152 in the week ended 24May. However this is still 50 per cent higher than a year ago.Wheat futures prices for November have also moved down to£138, reflecting the downward trend in international new cropwheat values. This movement has been on the back of healthy worldwheat production estimates from the USDA. The USDA is estimatingproduction of 650 million tonnes in 2008/09, up 50 million tonnesfrom the current 2007/08 estimate.

- UK soyameal prices have stabilised in recent weeks at around£300.tonne, but are still almost double what they were a yearago. Uncertainty over the size of the US soyabean plantings thisyear and concern over adequate supplies in 2008/09 have resulted involatility in soyabean futures market prices


Consumption
- TNS data for the most recent four-week period (ended 18 May)indicate a decline in retail pork purchases of three per cent involume terms compared with a year earlier, in contrast to the firstquarter when purchases had been growing strongly. Pork prices, incommon with other meats, are currently showing sharp increasescompared with last year. Consequently, expenditure was up eight percent.

- Purchases of belly, which grew strongly last year, have continuedto move higher in 2008. In the latest four-week period, they grewby 11 per cent . However, sales of chops fell sharply (-16%) andtotal roasts were also lower (-3%).

- Bacon purchases declined by four per cent in volume terms in thefour-week period, but a 10 per cent increase in average retailprices meant that expenditure was six per cent higher. Britishbacon's share of the market increased was little changed at 31 percent.