TheMeatSite.com - TheMeatSite.com - news, features and articles for the meat processing industry

AHDB Pig Market Weekly


07 May 2012

AHDB UK Market Survey - 4 May 2012AHDB UK Market Survey - 4 May 2012

The latest AHDB market intelligence forecasts for the UK sheep, beef and pig sectors were presented at the Outlook 2012 conference in London on the 2 May.

AHDB

The forecasts indicate that sheep meat production will increase in 2012 and again marginally in 2013. Beef production is forecast to decline this year as supply constraints prevail, levelling in 2013. Pig meat production is forecast to increase in 2012 and 2013 driven by higher UK clean pig slaughterings in both years.




Sheep meat

The results from the UK December 2011 livestock survey indicate that the national sheep flock has responded strongly to improved prices. The breeding flock recorded a two and a half per cent increase to reach 14.21 million head; the highest point since 2007. There are also expected to be greater numbers of ewe lambs retained for first time breeding in 2012, which will result in continued growth. The younger age profile of the flock and the continued rebuilding intentions are expected to keep culling rates comparatively low. The larger flock will result in these throughputs in increasing over time as there will be a larger pool of sheep to cull from.

The lambing rate for the 2012 lamb crop is expected to be above 2011 levels. With ewe condition at tupping reportedly good and the very mild winter, coupled with good feed availability, in most regions scanning results are expected to have been better on the whole. Some disease concerns, the spell of bad weather in April and drought in the south and east of England are expected to have mitigated this increase to some degree. With a larger flock and improved lambing percentages the 2012 lamb crop is expected to be the largest since 2008. Although production in the first quarter of this year is lower, compared with the year earlier, it is expected to increase in the second half of 2012. This will result in an overall increase for the year as increased lamb production offsets lower mutton production. The situation will be helped by higher carcase weights stemming from the excellent conditions and feed availability during the winter.

Beef and Veal

Beef and veal production is forecast to fall during 2012 as the reduction in calf registrations in 2010, brought on by increased feed costs and the decline in the breeding herd, will impact on the availabity of prime cattle for slaughter. The December census indicated that male cattle over two years of age were 12 per cent lower on the year, although this does reflect the increased cull bull throughputs in 2011 and shorter finishing periods. Those between one and two years of age were three per cent lower and those under one year old were down one per cent. In addition, the decline in the national herd, evident in the December census, is expected to reduce the number of cows and adult bulls slaughtered during 2012 and 2013. Cow slaughtering were at a historic high in 2011 as producers took advantage of the record prices on offer.

The fewer slaughtering this year are projected to result in beef and veal production falling by almost four percent to 902,000 tonnes. However, some respite in cereal prices, and a subsequent increase in demand for calves at the end of 2011 and in the early part of 2012 has resulted in increased registrations. For the year as a whole total calf registrations are forecast to be higher than in 2011, with earlier finishing this may impact on production levels towards the end of the year. This trend is further evidenced by recent BCMS figures indicating that there are more males aged less than six months in the cattle population, likely to be as a result of the firm finished prices and the relative easing of feed costs.

Pig meat

With regards to pig meat production, the December 2011 census showed a fall in the size of the female pig breeding herd, offset by a substantial rise in the number of maiden gilts. This suggests that the size of the UK breeding herd is stable and it is likely to continue at a similar level over the next year. After that, prospects for the breeding herd will somewhat depend on the market response to the EU sow stall ban.

In 2011, UK clean pig slaughterings were at their highest level since 2002. The main factor in the increase was improving sow productivity, with 21.3 pigs slaughtered per sow, up from 20.2 in 2010. Factors included high levels of sow replacement and improvements in husbandry, health and genetics. With these factors still in place, further productivity gains can be expected in the coming year. High feed costs mean that pigs are being finishing at slightly lower weights than last year. However, futures markets suggest that feed prices may fall later in the year, which could lead to increased carcase weights. The net result is that UK clean pig slaughterings in 2012 are forecast to be up by around two per cent compared with 2011, with a similar rise in pig meat production. A similar increase is likely in 2013.

Further conference news

In addition to the outlook for production the conference also looked at the economic challenges for the red meat and dairy sectors and the changing tastes and markets for consumers. Allan Wilkinson, Head of Agriculture at HSBC bank spoke about the wider economic climate, which in the week it was announced that the UK had re-entered recession, could have relayed a sober message. However, there were some positive messages for the prospects for agriculture, particularly in terms of the export market. Mr Wilkinson also praised UK farmers, suggesting that their ability to modernise in the face of the challenges that may lie ahead was admirable.

Giles Quick, director at Kantar Worldpanel, focussed on the consumer and retailer perspective. He reminded delegates of their position as a fundamental part of the UK grocery trade. However, Mr Quick painted a more subdued picture of the consumer position, where confidence is at a low ebb. Despite this, some positive messages were delivered. Kantar data shows that people eat at home more in times of economic uncertainty, offering a great opportunity for meal deals. In addition, he suggested to delegates that consumers are more likely to be looking out for ‘number one’, which translates into a desire to buy local British produce.

Ken Boyns, Director of Market Intelligence at AHDB, discussed the impact of commodity prices and the challenge of continuing to increase supply to feed a more affluent population. He stressed the importance of technology and how UK farmers must be able to embrace this to avoid being put at a competitive disadvantage.

Cattle market trends



Prices

In week ended 28 April the overall prime cattle deadweight average price strengthened almost a penny on the week to 339.9p per kg. The average price of all categories of cattle increased on the week with the price of steers up a penny to 341.4p per kg while heifers were marginally dearer at 341.2p per kg. At 325.2p per kg, the average price of young bulls was up two pence on the week while R3 young bulls were back by a similar amount to 333.4p per kg, suggesting that the quality of young bulls may have improved.

Cow prices have increased almost every week this year as numbers have been significantly down on the same period a year ago. However, in the latest week the overall cow price eased a penny to 266.7p per kg. Despite this the shortage of cull cows is likely to continue for at least the next few months, which will result in strong demand continuing and prices remaining firm.

In the week ended 2 May the prime cattle average price at GB auction markets eased a penny on the week to 186.3p per kg. The average steer price increased a penny to 187.6p per kg while heifers were at a similar price to the week earlier at 190.1p per kg. Young bulls were three pence cheaper at 178.9p per kg.

Consumption

According to the latest Kantar Worldpanel data, in the 12-week period ending 15 April 2012, household purchases of fresh and frozen beef declined five per cent on the year to 69,800 tonnes. Expenditure increased six per cent to £480 million, as increased retail prices more than offset the lower household purchases. Household purchases of all cuts of beef were lower year on year largely as a result of the reduced number of price promotions. In the 12-week period household purchases of frying/grilling cuts and roasting joints performed worst, down 13 and eight per cent respectively. The increased average price, driven by the fewer promotions continued to encourage consumers to switch to cheaper protein purchases, which in turn has resulted in increased chicken purchases so far in 2012.

In the 52-week period, household purchases of fresh and frozen beef were marginally higher on the year at 303,000 tonnes. Expenditure increased six per cent to £1.96 billion as a result of a similar increase in the average retail price. Sales of second quality stewing beef were four per cent up on the year while household purchases of mince were at a similar level to the year earlier.

Sheep market trends



Prices

In week ended 28 April deadweight lamb prices readjusted broadly in line with auction market prices. At 463.8p per the kg the new season lamb SQQ recorded a significant drop on the week, as did the old season lamb price at 426.9p per kg.

The lamb trade has undergone a turbulent few weeks of trading. However latest NSL prices at GB auction markets do show some recovery. In week ended 2 May the NSL SQQ averaged 232.0p per kg, an increase of 13p per kg on week earlier levels as demand evidently improved. In contrast, in the latest week the OSL SQQ averaged 192.4p per kg down two pence on the week.

The disproportionate increase in the NSL price against the OSL price can be attributed to some processors moving more towards new season processing, thus increasing demand for this product at the expense of the older lambs. It should also be noted that the old season trade continues to be hampered by too many overweight and overspec animals; this limits the marketing opportunities and means that demand is not as keen for this product. In contrast very few of the new season lambs fall into this category and are meeting a much better trade.

Processors have been forced into buying old season lambs in recent weeks, however, the increased numbers of spring lambs forward is slowly bringing this to a close. NSL throughputs in the week were 55 per cent higher, indicating that there was no shortage of these animals. Wednesday 2 May also recorded the largest daily marketing of spring lambs so far this year at 5,500 head.

Disruption to liveweight trade following bad weather over the weekend has reportedly added a boost to trading at auction in the early part of this week. Prices on Wednesday 2 May show a much more positive picture with the NSL SQQ up 26 pence on the week at 237.8p per kg. The OSL SQQ also increased, bucking the trend of the week, it increased five pence on the week to average 195.6p per kg.

Consumption

According to the latest Kantar Worldpanel data, in the latest 12- week period ending 15 April 2012, household purchases of fresh and frozen lamb increased six per cent compared to the previous year. This was solely driven by increased purchases of leg roasting joints as a result of the Easter holiday period falling in this period in 2012 and not last year. As expected, promotional activity on leg roasting joints increased with many retailers offering half price incentives. In the latest four week period, this activity resulted in a 118 per cent increase in volume sales of leg roasting joints. In the 12 week period expenditure increased nine per cent to £155 million, as despite the increased promotions the average price of lamb increased by almost three per cent. Household purchases of all other lamb cuts continued the trend of being lower on the year, sales of lamb mince were 17 per cent lower and purchases of lamb chops and lamb steaks were both down around 20 per cent.

In the 52-week period, household purchases of fresh and frozen lamb were nine per cent lower on the year at 70,000 tonnes. Expenditure increased one per cent to £600 million as the increase in the average price on the year outweighed the decline in purchases.

Pig market trends



Prices

The steady seasonal increase in finished pig prices continued in week ended 28 April, with the eurospec DAPP adding 0.57p per kg to average 146.92p per kg. This was four pence higher than a year earlier. Throughputs were little changed from a week earlier and remain above year earlier levels, even allowing for the extended Easter holiday this time last year. The average carcase weight in the DAPP sample increased by over half a kilogram to 78.95kg. This was the first time since January that the weekly average weight was heavier than the corresponding week a year earlier. The average probe measurement also increased slightly, to 10.6mm.

The weaner market remains well balanced, with the average price having remained between £45 and £46 per head for nine consecutive weeks. The average price for week ending 5 May was three pence higher than the previous week at £45.38. This is less than a pound higher than a year ago when prices were rising in response to increasing finished pig prices and falling feed costs.

The recent strengthening of the pound against the euro has suppressed cull sow prices, which have now lost over three pence per kg from their peak in late March. In week ended 28 April, the average price was 121.36p per kg dw, down just over a third of a penny on the week but still over 16 pence higher than in the corresponding week a year earlier.

Consumption

According to Kantar Worldpanel in the 12-week period to 15 April 2012, expenditure on fresh and frozen pork increased by five per cent to £221 million, but volume purchases fell by four per cent to £44 million. Reduced promotional activity in the early part of the 12 week period resulted in a nine per cent increase in the average retail price which partially outweighed the decline in household purchases. Sales of pork belly and loin roasting joints were the only two cuts to demonstrate an increase on the year, up 15 and nine per cent respectively. The continued reduced promotional activity, on roasting joints in particular, continued to drive the decline in sales, with purchases of leg roasting joints over 12 per cent lower compared to the previous year and sales of shoulder roasting joints 21 per cent lower.

In the 52-week period household purchases of pork totalled 187,000 tonnes, marginally higher than in the corresponding period a year earlier. The number of households purchasing pork increased marginally on the year. As a result of this and a five per cent increase in the average retail price, expenditure increased six per cent year in year to £927 million.

DOWNLOAD REPORT:- Download this report here

Share This


Related Reports

Reports By Country

Reports By Category

Our Sponsors

Partners