Pig Prices Stay Firm26 August 2013
UK - According to Stuart Ashworth, Quality Meat Scotland’s (QMS) Head of Economics Services, although pig producers in Scotland have seen their prices slightly decline over the past two weeks, prices still remain more than ten per cent higher than last year.
According to Mr Ashworth, pig prices are also firm across Europe with the average European price 5 per cent higher than twelve months ago.
"UK prices quoted in Euro have been impacted by currency exchange rate movements and prices are just over two per cent higher than 12 months ago," said Mr Ashworth. "This means that the competitiveness of imported European pigmeat on the UK market is reduced from 12 months ago, while UK exports to mainland Europe are more attractive."
Latest trade data suggest that exports of UK pork were more than 20 per cent higher than last year with growth in sales to both the EU and Asia. Imports of pork were marginally up but imports of bacon and ham were more than 10 per cent down.
"Higher prices across Europe have been aided by tighter supply," said Mr Ashworth.
"The December census showed a European sow population decline of four per cent and this is leading to a tighter supply of prime pigs.
"In May, the European Union slaughtered two per cent fewer pigs than it did in the same month last year. The current forecast is that pigmeat production across Europe will be 4 per cent lower over the second half of 2013 than it was last year."
Another factor currently helping the European market is the politics of international trade.
"Russia has restricted pigmeat imports from the US, Canada and Brazil over concerns about the use of growth promoters," said Mr Ashworth. "This has created greater demand from Russia for European pigmeat and, at the same time, demand from China and Hong Kong continues to grow.
"Notwithstanding the speed with which the politics of international trade can change, the continued tightness of European pig supplies are likely to underpin prices for some time yet."
However, while UK producer prices may have increased over the past 12 months, producer margins and confidence still remain fragile.
"Feed is the largest input cost for pig producers and pigs currently being sold will have been produced with high cost feed," observed Mr Ashworth. "However, looking forward there is some prospect of feed prices falling.
"Prices for feed grains eased back as the European harvest got under way and currently stand around £50 per tonne lower than last year," he added.
"Similarly protein prices, particularly soyabean meal where global production is expected to be 6 per cent higher than last year, have also eased. Latest soyabean prices, although edging up in the past couple of weeks, are around 15 per cent lower than this time last year."
Producer margins will, therefore, be slowly improving. Producers, however, still remain wary with regards to expanding their sow herds.
"Slaughter statistics show that across the UK sow slaughterings over the first six months of the year were 2.5 per cent higher than last year, although they have fallen below year earlier levels during July," said Mr Ashworth.
"Although the December census showed an increase in gilts intended for breeding, the combination of higher sow slaughterings in the first half of this year and the 2 per cent decrease in sows reported in December do not point towards any material increase in the sow herd, and hence future production, unless the herd has become more productive."