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AHDB Pig Market Weekly


12 March 2012

AHDB UK Market Survey - 9 March 2012AHDB UK Market Survey - 9 March 2012

The record prices on offer to sheep producers over recent years has resulted in an increase in the national flock according to the results of the December 2011 UK survey published by DEFRA.

AHDB

UK sheep flock expands as cattle and pig herds contract

The survey results indicated a decline in the number of dairy and beef cattle as well as fewer pigs on UK holdings as these sectors struggle with profitability.


At 22.0 million head the UK sheep flock increased by three per cent year on year. This was driven by increased numbers in England, Wales and Northern Ireland while numbers in Scotland declined. The breeding component of the flock rose two and a half per cent to total 14.2 million head. This growth is likely to be as a result of increased retentions of ewe lambs following increased adult sheep slaughter in 2011. Rebuilding intentions reflect the renewed optimism within the industry created by improved prices for finished, store and breeding animals over the previous 12 to 24 months.

The survey also reported increased lamb numbers with the number of other sheep and lambs recording a four per cent increase to 7.7 million head. This represented a modest growth in the flock although it still remains well below the level prior to FMD in 2001.

The total number of cattle on UK holdings fell two per cent to 9.7 million head, driven by a decline in all four regions of the UK, although the decline recorded in Northern Ireland was marginal. Numbers in almost all categories of cattle fell year on year with the number of male cattle down three per cent to 2.6 million head. The number of female cattle was two per cent lower at 7.1 million head.

The breeding component of both the dairy and beef herds declined, with suckler cow numbers down one per cent at 1.6 million head and dairy cow numbers two and a half per cent lower at 1.8 million head. This decline has been driven by much higher culling rates in 2011 as a result of the record prices on offer for cull cows due to the shortage of manufacturing beef globally. The short term outlook remains bleak for any rebuilding of the herds with the number of females between one and two years old down two per cent for beef and up only one per cent for dairy. This indicates that there are not sufficient heifers in the herd to rebuild breeding numbers.

The number of females under one year of age recorded a one per cent increase on the year, however, as in 2011, they are likely to be slaughtered for prime beef production than be retained for breeding. Male cattle over two years old were 12 per cent lower at 299,000 head, although this reflects increased cull bull throughputs and shorter finishing periods for steers. Those aged between one and two years were down three per cent to 979,000 head as lower calf registrations in 2010, bought on by increased feed costs and the decline in the breeding herd, impacted numbers. Those under one year of age were down one per cent at 1.34 million head. Recent BCMS figures indicate that there are more males aged less than six months in the cattle population as a result of the increased finished prices and some easing of feed costs encouraging more dairy bull calves to be retained for finishing.

Despite an increase in numbers in Northern Ireland the UK pig herd fell by over one per cent to total 4.3 million head. Pig numbers in the other three regions declined, particularly in Scotland, which recorded a five per cent decline. The UK breeding herd fell one and a half per cent to 499,000 head, driven by a three per cent decline in female breeding pigs to 409,000 head. Producers have looked to improve productivity by introducing younger breeding animals and taking advantage of strong cull prices by slaughtering older stock. The drive for younger more productive animals is reflected by a nine per cent increase in the number of gilts intended for first time breeding.

Reflecting the smaller breeding herd and the quicker, lighter finishing of animals the number of fattening pigs was one per cent lower on the year at 3.8 million head.

Cattle market trends



Prices

Deadweight cattle prices in GB have strengthened throughout February as finished cattle supplies tightened. With Easter approaching there may be further competition for product. Reports suggest that some processors have found it necessary to pay more to secure enough product to fulfill their requirements. In week ended 3 March the overall steer averaged was 338.1p per kg, up six pence per kg over the past four weeks; R4L carcases averaged 345.8p per kg. The overall young bull average strengthened nine pence since early February to reach 316.7p per kg in the latest week, whilst heifers were eight pence dearer over the same period at 339.5p per kg.

The UK market demand for quality cows remains strong, backed by the continued firm demand for cow beef on the Continent. In week ended 3 March the -04L cow price increased over two pence on the week, and 13p over the month, to average 272.1p per kg.

In week ended 7 March prime cattle prices at GB auction markets also remained firm. The average price of steers and heifers both strengthened a penny on the week to 189.9p and 192.4p per kg respectively, while young bulls levelled at 180.6p per kg.

Estimated slaughterings

Estimated GB prime cattle slaughterings in week ended 3 March totalled 34,000 head, seven per cent lower than in the corresponding week a year earlier. The reduced supply of dairy bull calves being reared for production has continued to impact on young bull slaughterings, which in the latest week were 21 per cent down on the year. In the year to date, prime cattle slaughterings are estimated to be eight per cent lower year on year.

Retail price spreads

During February the average farmgate price for beef increased while the average retail price declined. As a result the actual price spread between the producer and the retailer narrowed compared with the month earlier. Producers received, on average 54 per cent of the final retail price during February, one percentage point more than in the month earlier. With farmgate prices increasing to a greater extent than retail prices during the past 12 months the latest figure is four percentage points higher than in February 2011.

Sheep market trends



Prices

The pressure on liveweight prices over the past couple of weeks filtered into the deadweight trade in week ended 3 March. At 440.1p per kg the SQQ was over a penny lower week on week. However the full effect of the four pence drop in the liveweight trade recorded in the previous week has not translated into a comparable fall in deadweight prices, with prices only falling two pence in the last two weeks.

In week ended 7 March liveweight lamb prices at GB auction markets were varied. The old season lamb SQQ increased half a penny to average 202.3p per kg. The average price for heavy animals declined by two pence to 183.3p per kg, those over 52 kg were over a penny cheaper at 167.0p per kg. A small number of new season lambs have been traded in the week; the NSL SQQ averaged 234.4p per kg.

Demand for lighter animals is still evident. In the medium weight band those in the lower half, destined for the export market, traded at a premium to the heavier animals in the weight range. By excluding those lambs weighing over 43 kg it is evident that there is a premium of up to three pence per kilogram being achieved. In the past seven days the medium weight SQQ (39.1-45.5kg) averaged 202.7p per kg while within the range, the animals weighing 39.1-43kg averaged 205.1p per kg.

Organic sales rebound

Having fallen by a third in 2010 and with further falls in the preceding years, organic lamb sales increased 16 per cent in 2011 according to latest figures from the Soil Association. They reported a one per cent increase in organic lamb slaughtering to total 166,000 head. However, the report indicated that the organic premium received by producers was eroded in 2011 largely as a result of the rapid increase in conventional lamb prices leading to some producers marketing lambs as non-organic.

Retail price spreads

Farmgate lamb prices eased throughout February, falling by one per cent on the month to average 441.1p per kg. Over the same period retail prices declined two per cent. As a result the gap between the producer price and retail price narrowed and during February producers received almost 58 per cent of the final retail price compared with 57 per cent in January.

Pig market trends



Prices

In week ended 3 March the DAPP increased marginally for the first time in eight weeks to 139.59p per kg. At this price the DAPP was over three per cent higher than at the same time last year. The average weight of pigs in the sample declined on the week to 79.7kg with the average probe remaining at 10.9mm.

There was a further increase in the export specification sow price to average 118.84p per kg in week ended 3 March. At this price sows were considerably dearer than in the corresponding time last year.

Growth in EU pig meat exports

There was significant growth in the EU pork export trade in 2011. This was largely facilitated by an increase in domestic production and subdued EU demand. In addition, there has been strong demand on the global market, particularly from the Far East. The weak euro also contributed to competitive EU prices compared with both North and South American exporting countries.

EU exports of fresh and frozen pork to third countries increased by a quarter in 2011 compared with a year earlier. Denmark and Germany were the largest contributors, accounting for 24 per cent and 22 per cent respectively of the total EU trade. The EU’s two main export markets, Russia and Japan, both recorded an increase in shipments. Exports to Russia increased by 16 per cent while trade to the price premium Japanese market were four per cent higher. South Korea overtook Hong Kong as the third largest export market, with shipments up 91 per cent on the year. There was also a sharp rise in shipments to China and Hong Kong.

Pig offal exports to third countries increased by 24 per cent on the year. Hong Kong, China and Russia were the main markets. EU shipments of pig fat increased marginally year on year with the main destination being Russia, which accounted for 71 per cent of the EU pig fat trade.

Retail price spreads

Steadily declining farmgate pig prices meant that the average price received by producers in February at 139.7p per kg was almost four pence per kg lower compared with the month earlier. Over the same period, retail pork prices increased marginally.

As a result, the proportion of the retail price received by producers declined by two percentage points compared to the month earlier to 37 per cent.

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