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AHDB Pig Market Weekly


14 May 2012

AHDB UK Market Survey - 11 May 2012AHDB UK Market Survey - 11 May 2012

On the back of high finished cattle returns in 2011, the rearing calf market has remained firm since the turn of the year.

AHDB

Firm calf market

Averaging £240 per head at auction, continental-cross bull calf prices in the first quarter were £12 per head higher than in the final quarter of 2011 and £71 per head stronger than in the corresponding period last year. Despite a dip during the disruptions over the Easter period, prices have strengthened further and for the month of April averaged £275 per head, £55 higher than the previous month. Year to date returns have averaged £256 per head, compared with £186 per head in the first four months of 2011.




Dairy bull calf values have also stayed strong, with the average auction price increasing from £53 per head in the last quarter of 2011 to £59 per head in the first quarter of 2012. As with continental-cross bull calves, prices have strengthened further and the average recorded for April was £79 per head. At £65 per head, average returns for the year so far have been markedly better than the £34 per head they were in the corresponding period in 2011.

Cattle market trends



Prices

In week ended 5 May the overall prime cattle deadweight average price eased over a penny on the week to 338.5p per kg. Reports suggest that the wet weather conditions resulted in some rehousing of cattle previously turned out and a subsequent marketing of under-finished plainer cattle. However, the supply and demand position is finely balanced and a small increase in demand could result in some upward pressure on prices. The price of R4L steers and heifers both declined by a penny on the week to average 345.9p and 344.4p per kg while the price of R3 young bulls declined over two pence on the week to 331.2p per kg.

In week ended 9 May the average prime cattle price at GB auction markets eased a penny on the week to 185.4p per kg. The average price of steers declined almost three pence to 185.1p per kg while the price of heifers and young bulls both increased marginally to 190.4.p and 179.1p per kg respectively.

EU cow prices

The cow market in the EU has remained firm so far in 2012 and prices have moved up steadily from July last year. There has been ongoing strong demand for cow beef due to increased consumer demand for mince. Declining supplies of prime beef have also contributed to the firm cow beef market. Export demand for cow beef from non-EU markets has also remained firm. The EU price for grade O3 cows reached a record high of €309 per 100 kg dw in the week ended 29 April up nine per cent compared with the beginning of the year and 16 per cent more than at the end of April last year. Normally there is a seasonal rise in the new year but somewhat unusually there was no seasonal fall last autumn.

Retail price spreads

During April both the average farmgate price and retail price increased marginally. As a result the actual price spread between the producer and the retailer was little changed on the month. Producers received, on average 54 per cent of the final retail price during April. With farmgate prices increasing to a greater extent than retail prices during the past 12 months the latest figure is two percentage points higher than in April 2011.

With the exception of fillet and rump steak all other cuts of beef were dearer on the month. In April 2012, all cuts of beef were more expensive than in the corresponding month a year earlier. The largest increase in price was recorded by standard mince, up 14 per cent on the year.

Sheep market trends



Prices

In week ended 5 May, despite some recovery in the liveweight trade, deadweight lamb prices continued their decline. Old season lamb prices declined sharply, recording a drop of 20 pence to average 407.2p per kg. New season lamb prices declined to a lesser extent, dropping three pence on the week to average 460.9p per kg. While prices have been tracking below those in the corresponding period in 2011 for a number of weeks, in the latest fortnight average prices have been below 2010 values.

The recent recovery in the new season lamb liveweight trade appeared to be short lived as prices at GB auction markets in week ended 9 May resumed a downwards trend. It is possible that this decline can be attributed, in some part, to the weakening of the Euro which affects the price that the export market can pay. The Euro is currently at its lowest level since late 2008. The new season lamb SQQ declined 13 pence on the week to 218.8p per kg, effectively eradicating the gains of the previous week. Old season lamb prices continued to ease, falling a further three pence on the week to average 189.5p per kg. The trade for these old season lambs is edging towards the end with lower numbers coming forward.

Amid the relatively downcast lamb market the cull ewe trade was relatively stable in the latest week. Recording a small increase in price, cull ewes averaged £78 per head.

Retail price spreads

The average farmgate lamb price in April was 451.4p per kg. As trade eased following the Easter period this represented a decline of one per cent on the month. Over the same period retail prices were almost unchanged, therefore the proportion of the retail price that farmers received, at 58 per cent, was marginally less than they received in the month earlier.

However, this is considerably less than in the corresponding month of 2011. This is a result of the unprecedented increase in lamb prices during spring 2011, which at that time were not translating into considerably higher retail prices. In the previous twelve months retail prices have increased seven per cent while farmgate prices in April were 13 per cent lower on the year due to differing supply and demand fundamentals in the market.

Pig market trends



Prices

Finished pig prices continued their seasonal upward trend in week ended 5 May, with the DAPP EU Spec increasing by over a penny to average 148.21p per kg. This comes despite rainy conditions curtailing any barbecue demand. Supplies were also plentiful, with estimated throughputs comfortably above 2011 levels, and carcase weights also heavier than a year ago, although slightly down on the previous week at an average of 78.77kg.

Once again there was little movement in the weaner market, with the average price in week ending 12 May falling by 14 pence to £45.24. This is almost identical to the level a year ago when prices were rising as high feed costs began to ease back. This year, high feed costs are again limiting the willingness of finishers to take increased numbers of weaners.

With sterling continuing to strengthen against the euro, cull sow prices remain under pressure to prevent higher prices on export markets. In week ended 5 May, the average price was 121.01p per kg dw, down another third of a penny on the week but still nearly 15 pence higher than a year earlier.

Retail price spreads

The average farmgate pig price in April was 146.2p per kg, three per cent higher than in the month previous. Over the month, the average retail price increased by less than one per cent. As a result, the gap between producer and retail prices decreased slightly to 61 per cent. This means that producers received an average of 39 per cent of the retail price which is marginally lower than at the same point last year.

Average retail bacon prices in April were nearly five per cent lower than in March. This means that the gap between producer and retail prices for bacon decreased to 65 per cent, which is equivalent to producers receiving 35 per cent of the retail price, significantly higher than in April 2011, when the figure was just over 31 per cent.

Average prices for most pork cuts were virtually unchanged between March and April. The largest increase was for minced pork but even this was only up by just over one per cent. Pork fillet was the only cut which was noticeably cheaper, with the average price three per cent lower than in March. Compared with prices in April 2011 loin chops were less expensive, with prices have fallen by six per cent. Prices for other cuts were higher than a year earlier with the largest rises for minced pork, boneless leg and traditional pork sausages.

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