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QMS (Quality Meat Scotland)


19 June 2015

QMS (Quality Meat Scotland) - June 2015QMS (Quality Meat Scotland) - June 2015


QMS - Quality Meat Scotland

Cattle

Prices and Supplies

Between March and mid-May, prime cattle deadweight prices fell steadily. Having opened March at an average price of 370p/kg dwt for steers at reporting abattoirs, by the week ending May 16, the average had fallen by 32p/kg to just under 338p/kg; a decline of 8.5%. Prices then stabilised in the third week of May. This left them 4.5% lower than in the same week last year.

At Scottish auctions, prime cattle prices also trended lower through the spring. Indeed, the prime cattle average dipped from around 205p/kg lwt in February to around 190p/kg lwt in May. However, the differential to 2014 has been much smaller at auctions than for direct sales, with the prime cattle average trailing its year earlier level by 1-2% in most weeks. Then, in the second half of May, prices averaged the same as they had in 2014.

A number of factors have placed downwards pressure on the market of late. With prime cattle numbers trailing year earlier levels at price reporting abattoirs in recent months, it indicates that demand has fallen significantly, given that a shorter supply would normally push prices higher, if demand was constant. The main driver behind the imbalance was a a significant build-up of lean manufacturing beef in UK cold stores. This was caused by a number of factors, including increased UK beef production volumes in late 2014, and higher imports from Ireland which followed a jump in Irish beef production. In addition, the strength of sterling made it even harder than usual for UK exporters to compete in price sensitive markets for manufacturing grade beef, leaving more beef on the home market. The build-up of beef in cold stores reduced processor requirements, pushing down the prices they were willing to pay producers for their cattle. In addition, retail demand had reportedly been firm ahead of the festive season, then Valentines Day and Easter. With procurement for these special occasions generally taking place a month in advance, demand reportedly slipped after Easter buying in early March. This all happened at a time when cattle population data indicates that there were fewer prime cattle of slaughter age than 12 months ago. The stabilisation of prices in the third week of May suggests that the build-up of beef in cold stores may have begun to decrease, reducing the imbalance between supply and demand for cattle.

Having fallen slightly behind year earlier levels in March, the UK prime cattle kill decreased by a more significant annual rate of 4% in April. 181,500 prime cattle were slaughtered, working out at 36,300 per week. Abattoir throughput fell in each of the three UK regions, with England & Wales (E&W) showing the smallest decline of 2.5% while numbers were down by more than 5% in Scotland and by more than 7% in Northern Ireland (NI).

UK slaughter data continued to show a shift from young bulls to steers with the steer kill rising by 3% while the young bull kill was down by more than a quarter. For a second successive month, the number of heifers handled by UK abattoirs was lower than a year earlier, slipping by 5.5%.

At 354.2kg, the average prime cattle carcase weight at UK abattoirs continued to exceed year earlier levels in April. However, the annual increase slipped back from 5kg in February to just over a kilo in March, before narrowing further to just 0.1kg in April. As noted above, prime cattle throughput at Scottish abattoirs was down by nearly 5.5% year-on-year in April with throughput totalling 38,100 head. Numbers were lower across the board, with steers down 4.5%, heifers down 6.5% and young bulls by 2.5%.

The average weekly kill was down by more than 400 head on the same month last year at 7,600 head. While the trend of increasing prime cattle carcase weights at the UK level appears to have slowed in recent months, there has been no let-up north of the border. Indeed, at 377.5kg in April, the average weight in Scotland was up by 8kg (2%) year-on-year. Steers and heifers averaged 2% heavier at 400kg and 349kg, respectively, whereas young bulls were marginally lighter at 347kg. This makes bad reading for abattoir operators, who find it harder to sell steaks and roasting joints from carcases weighing over 400kg to premium customers. Where steaks and roasts are too big for the multiple retailers, they often have to be sold at significantly lower prices into the food manufacturing trade.

In contrast to prime cattle, cull cow prices were relatively stable through the spring and were mostly above 2014 levels. Although the average cull cow price at price reporting abattoirs has fluctuated between 245p/kg dwt and 260p/kg dwt, grade prices have shown little movement. Clearly, there has been week-to-week variation in carcase quality. At Scottish auctions, average prices have also fluctuated more than they did in 2015, suggesting a wider variation in quality. Moving into May, deadweight prices for the better grading cows have dipped back a touch. Meanwhile, auction prices dipped at the beginning of the month before picking up for three weeks. Compared to May 2014, auction prices have averaged 2.5% higher, while deadweight prices for most grades have been 2-3% higher.

April was the fourth time in five months that UK abattoirs slaughtered a higher number of mature cows and bulls than 12 months before. At 47,300 head, slaughterings were up by 1%. The weekly average kill fell back to 9,500 head from 10,900 in March and 12,600 in the first two months of the year. In most years, the weekly average mature cattle kill has fallen to a seasonal low in April.

During April, UK abattoirs produced an estimated 80,600t of beef. This was down 2% yearon-year and was the 2nd consecutive month to show an decrease. Prior to March, 13 of the previous 14 months had shown year-on-year increases.

The latest household purchases data from Kantar Worldpanel, for the 12-week period ending April 26, shows that the volume of beef retailed in GB decreased by 2% when compared with the same period of 2014. This was despite a greater number of people buying beef and it becoming marginally cheaper to buy. Looking at the sales by cut, while sales of roasts, stewing beef and mince all declined, steak sales volumes progressed, rising by 4%, despite average prices continuing to run ahead of year earlier levels by 2%. Reflecting changes in shopping habits, the data showed that people were generally buying beef more often, but that this was more than offset by purchasing a smaller volume of beef on each trip.

In euro terms, Irish prime cattle prices have been relatively steady of late, edging up through March, stabilising in April and then slipping a touch in May. In the week ended May 24, the average R3 grade steer sold for €4.05/kg dwt (290p/kg dwt). This was down 4c on the month but 2c higher than in late March. Compared to the same week last year, it was 25c higher; an increase of 6.5%. However, due to the strengthening of sterling against the euro, when converted into sterling, Irish farmgate prices were down 4p on the month and by 18p (6%) on the year. The gap between the UK and Irish averages for an R3 steer stood at 17% in late May. This was similar to May 2014. However, back in the autumn, it had been as wide as 36%.

Most countries on the continent favour young bull production over steers. In the week ending May 24, the average price for an R3 grade young bull in the EU was 1% lower on the month, at €3.72/kg dwt (267p/kg). In Germany and the UK, euro prices fell by 3% and there was a 2% decrease in Spain. Smaller declines occurred in France, Ireland and Holland while Polish prices edged higher. By contrast, prices jumped by 6.5% in Sweden. In late May, Irish prices were 7% above the EU average; in the UK, they were 18% higher.

Compared to a year earlier, the EU average R3 grade young bull price was up by 2% in euro terms. However, there was significant variation around this average. Of the major producers, there were 3-4% declines in France and Spain, and a below average lift in Holland. In Germany, prices rose slightly faster than the average. Much larger gains were seen in Poland (9%), Ireland (10%), and the UK (12.5%). Swedish prices led the way, rising by a fifth.

 

In the week ending May 24, the average O3 grade cow price in the EU was up slightly on the month at €3.06/kg dwt (220p/kg dwt). Some Member States, including the UK, Germany, Spain, Ireland and Poland, saw small euro declines of 1-2%, but this was more than offset by increases elsewhere. For example, there were gains of 2% for French and Dutch producers and stronger increases of 5% and 7% in Italy and Sweden, respectively.

Compared to a year earlier, the EU O3 cow price was up 2.5% in euro terms. This masked a wide variation. Indeed, while prices were up 14-15% in the UK and Ireland, and by more than a fifth in Sweden, they were 5% lower in France and Spain. In Holland and Poland, prices increased by an above average rate of 5% and there was a 7% increase in Germany.

During March 2015, UK beef exports trailed year earlier levels by 8% at 7,900t. This was a 6-year low for the month. Exports accounted for 11.5% of UK production; down from 12.5% in March 2014. Reflecting the headwind of an unfavourable exchange rate, UK beef exports to the EU were down 10.5% year-on-year at 7,500t in March. Though exports to Ireland, Italy, Denmark, Poland, Italy and Sweden rose, these increases were more than offset by a sharp decline in shipments to Holland, the second largest market. Germany also disappointed. UK exports outside of the EU were up significantly year-on-year in March at 500t. Trade with Hong Kong remained the bulk of non-EU shipments, accounting for two-thirds of the total, having risen to nearly 350t from less than 100t in March 2014. Exports to Switzerland and Norway continued to show growth on last year, but from a low base.

 

The expansion in beef imports to the UK appears to have slowed down in the first quarter of 2014 (Q1). Indeed, overall imports were up by 1.5% year-on-year at 58,600t, compared with a calendar year increase of more than 5.5% in 2014. March trade volumes were marginally above year earlier levels at 21,300t as higher fresh beef deliveries were almost cancelled out by lower imports of frozen product. During Q1 2015, imports of beef from Ireland were down fractionally on last year at 41,900t. This was 71.5% of total imports; down one percentage point from a year earlier. Having been higher in the first two months, March volumes were 7% lower year-on-year at 15,000t. Most of this decline was down to frozen imports which fell by a fifth; fresh imports were 3% lower. The decline in product arriving from Ireland was mostly offset by higher imports from Poland, Holland, Germany, France, Spain, Belgium and Italy. Arrivals of non-EU beef were also above year earlier levels in March, running 21% higher at 1,900t. Though trade with Oceania fell back, increased imports arrived from Botswana, Namibia, Brazil and Uruguay.

News Round Up

After rising by more than 13% during 2014, prime cattle throughputs at Irish export abattoirs rose by just 1.5% year-on-year in Q1 2015. Into April and May, numbers have now fallen behind last year’s levels with the prime kill down 3% in the seven weeks to May 16. According to Eurostat trade data, March was the first month of Irish beef exports to the USA. During the month, Ireland exported just 2.6 tonnes of fresh beef and 0.8t of frozen beef to US buyers. The price per tonne of these shipments shows that high value cuts of beef were sold. Indeed, the average price for the fresh beef was €18,300/t (£13,000/t), while the frozen beef came in at an average price of €12,100/t (£8,600/t). Currently, Ireland is only approved to export muscle cuts of beef to the US, but discussions are ongoing in attempt at gaining access to the lucrative US market for minced beef. In the USA, the Agriculture Committee in the House of Representatives has voted to overturn the controversial country-of-origin labelling (COOL) requirements which led Canada and Mexico to take the US Government to the WTO. The vote followed a WTO ruling that found the legislation to be in violation of international trade rules and would thereby allow Canada and Mexico to impose retaliatory measures. COOL was found to have discriminated against meat from animals spending time on both sides of the US border. This was because it led to increased separation of products on supermarket shelves and generated an additional administrative burden throughout the supply chain, thereby creating an incentive for processors and retailers to favour US product. US meat processors have consistently been opposed to this legislation. As well as for beef, the Agriculture Committee voted to repeal the law covering pork and chicken.

In mid-May, producer prices in Canada averaged 37% higher than a year earlier. Indeed, in the key beef producing state of Alberta, the average steer sold for C$7.44/kg dwt (391p/kg), compared with C$5.44/kg dwt (286p/kg) in the second week of May 2014. The price increase reflects tight supply across North America plus a decrease in the value of the Canadian dollar against the US dollar. On the supply side, the Canadian cattle inventory showed that on January 1 2015, there were 3% fewer cattle on Canadian beef farms than 12 months before. The number of beef cows was 2% lower at 3.824m head, while the number of beef heifers for slaughter and steers over 12 months of age were both down by 5% on a year earlier. Meanwhile, in the key Canadian export market of the USA, slaughterings were down 7% year-on-year in the first 18 weeks of 2015. In terms of currency movements, the US dollar is currently around 10% stronger than a year earlier against the Canadian dollar, allowing Canadian producer prices in local currency to rise faster than they have in US dollar terms. In US dollars, prices have risen by 22%. Prime cattle have been in tight supply in New Zealand this year with steer numbers 2.5% below year earlier levels in the first 7 months of the 2014/15 season. Going forward, supplies are expected to tighten further and could end the season 6% lower, as strong prices and drought led to earlier slaughtering during the summer months (winter in the UK). Due to the combination of shorter supply and increased export demand from the USA, 300kg steer prices are well above year earlier levels, trading up 18% year-on-year at NZ5.30/kg dwt (250p/kg) on the North Island and up 21% at $NZ5.10 (240p/kg) on the South Island. In contrast to tighter steer supplies, increased numbers of heifers have been reaching NZ abattoirs this year. However, this has reflected a downturn in dairy prices which have led dairy producers to retain fewer heifers for breeding; like steers, beef heifers have reportedly been in shorter supply. Despite the strong outlook for prime cattle prices, the store market has taken a downswing in recent weeks as finishers are reported to have secured cattle earlier in the year, reducing demand in May. Nevertheless, store prices remain well above year-earlier levels on both the North and South Island’s at around NZ$2.60-2.70/kg lwt (125p/kg lwt). During the first four months of 2015, Brazil exported 317,900t of fresh beef. This was down by more than a fifth on the same period of 2014 when just over 400,000t had been shipped overseas. The sales decline came despite a decrease in average export prices; they slipped by 4% in US dollars terms to $4,236/t (£2,700/t). However, when converted back into the Brazilian real, export prices in fact increased by approximately 18%, meaning that overall export sales revenues were 6% lower in local currency terms than twelve months before (they were 24% lower in dollars at $1.35bn (£860m)). Though exports of fresh beef fell sharply, trade in processed beef products, offal, casings and salted beef all showed increases. The main drivers behind lower fresh beef exports included economic crises in two of Brazil’s major customers, Russia and Venezuela, which limited consumer purchasing power. Exports to Hong Kong, Iran and Chile were also significantly lower, but Egypt bought slightly more Brazilian beef. Going forward, the Chinese market has opened to Brazil and this should help the Brazilians to replace lost custom elsewhere. The end to the ban was initially announced last summer by Chinese authorities, but it has taken almost a year to receive the final go-ahead. Eight Brazilian plants have been approved for export to China with a further nine expected to gain approval in July.

Sheep

Prices and Supplies

New season lamb prices at GB price reporting abattoirs have opened the 2015/16 season at much lower levels than those seen last year. In the week ending May 23, the average SQQ1 lamb price was a fifth below its year earlier level at 421p/kg dwt. This was the lowest price for the third week of May since 2008. One factor placing pressure on farmgate prices has been carcase quality. In the first three weeks of May, 78% of lambs graded at R3L or better, down from 80.5% in the same period of 2014.

However, this was a one percentage point improvement on the first three weeks of the 2013/14 season. At Scottish auctions, prime lamb prices opened the 2015/16 season at a significant discount to 2014 levels, down 11.5% yearon-year at 206.5p/kg lwt. As May progressed, prices fell further, and, by the week ending May 27, the average SQQ lamb price had slipped to 183p/kg, 24.5% below its year earlier level. When considering potential drivers of the lower prices this year, the first place to turn is the euro to sterling exchange rate. With the European Central Bank committed to a prolonged period of bond-buying and negative interest rates, whereas the Bank of England is expected to raise its Bank Rate either later this year or early in 2016, the value of sterling has increased significantly in relation to the euro. In late May, sterling was 13% stronger than a year earlier, making it difficult to profitably export lamb into the European market (to hold a euro price constant compared to last year would require accepting 13% less sterling in return). In addition, sterling has also strengthened against the New Zealand dollar, making imports from NZ look attractive.

 

Another influence on the market has come from the supply side. Looking at the 4 weeks to May 27, the total number of lambs and hoggs reaching GB auction markets rose by nearly 5% year-on-year to 401,600 head. However, within these figures, the number of SQQ lambs and hoggs fell by 6% while the number of overweight lambs and hoggs was 44% higher. This suggests that although processors have had more prime sheep to handle, they have had fewer ‘supermarket spec’ lambs and hoggs to work with, lowering their potential returns and hence the prices they have been willing to pay producers.

At Scottish auctions, new season lambs have been reaching the market much quicker than last year. Numbers rose 17% year-on-year in the first four weeks of May with SQQ numbers up 10% and heavy lambs nearly 50% higher. April slaughter data from Defra showed that the UK prime sheep kill fell when compared with 12 months before for the first time since Q1 2014. Numbers were down by 3.5% at 1.063m head.

Auction market data for the month of April indicated that there were shorter supplies of both hoggs and new season lambs than during the same month of 2014. The regional split of the slaughter data showed that in contrast to the UK decline, numbers rose by 4% in Scotland and by 18% in NI; these gains were more than offset by a 5% decrease in E&W. The average carcase weight of the prime sheep slaughtered at UK abattoirs during April edged 0.2kg lower on the year to 20.2kg. This was only the second time in 22 months that prime sheep carcases had been lighter than 12 months before.

At Scottish abattoirs, slaughter numbers increased by 4% year-on-year in April to 130,200 head. This worked out at just over 26,000 prime sheep per week, compared with slightly fewer than 25,000 per week in April 2014.

In contrast to the UK as a whole, the average prime sheep carcase weight at Scottish abattoirs rose by 0.5kg year-on-year in April 2015, reaching 20.7kg. This was an increase of more than 2%. In the week ending May 27, cull ewe prices averaged £71 a head at Scottish auctions. This was up slightly on the same week in 2014, having been well ahead of year earlier levels through the winter.

With tight supplies pushing up prices significantly from October 2014 until March 2015, this suggests that the previous imbalance between supply and demand has now reduced. Although the level of ewe & ram slaughtering at UK abattoirs continued to trail year earlier levels by a significant margin in April, the decline did narrow to its lowest level in 7 months. At 141,900 head, throughput fell by 11% when compared to the same month last year. With both prime and cull sheep throughput behind year earlier levels in April, UK sheepmeat production fell by 6% year-on-year to 25,400t.

In the 12 week period to April 26, GB households purchased 2% more lamb than 12 months before. Sales volumes look to have been underpinned by competitive pricing. Indeed, with the average price of lamb falling by 5.5%, more households bought lamb; though it should be noted that 3.5% less money was spent buying lamb.

Looking deeper into the data, there was a shift in sales away from chops & steaks towards leg roasts, shoulder roasts and mince. This may have been influenced by chops & steaks being priced at a similar level to a year ago, whereas roasting joints and mince were around 6% cheaper. Between late April and late May, prices for heavy lambs2 fell back across most of the EU28. On average, heavy lamb prices slipped 0.5% to €5.56/kg dwt (399p/kg dwt). Places to see euro terms declines included GB (-1%), France (-5%), Spain (-9%) and Holland (-23%). However, prices were only slightly lower on average due to significant increases in the Irish Republic (4%), NI (11%) and Romania (36%).

Compared to a year earlier, heavy lamb prices averaged 6% lower in the EU28 in late May. In France, the Irish Republic, and Romania there were small declines of around 1-2%, but the decreases amounted to 6.5% in NI, 9% in GB, and 20% in both Holland and Spain. The average light lamb3 price in the EU fell by 5% in the four weeks to May 24, slipping to €5.73/kg dwt (411p/kg). Prices fell at a similar pace to the average in Spain, Portugal, Greece and Italy, but by 12% in Hungary. By contrast, there were small increases of 2.5% in Bulgaria and 4% in Croatia.

The recent declines left the EU light lamb average marginally below its year earlier level. Prices were 1-2% lower in Greece and Spain and 4-5% lower in Italy and Portugal. However, these declines were almost cancelled out by increases of around a fifth in Bulgaria and Slovenia.

The latest trade data shows that UK sheepmeat exports were down by 24% yearon-year in March at 6,400t; an 11-year low for the month. The significant decline came despite higher domestic production. This meant that, as a proportion of sheepmeat production, exports fell to less than 29%, compared with 41.5% in March 2014. Despite a stronger sterling against the euro, UK sheepmeat exports to the EU rose by nearly 1% year-on-year in March to 6,200t and may have been influenced by the earlier Easter. Although sales to customers in France fell by a third to 2,850t, this was more than offset by an expansion in trade with Belgium, Germany, Italy and Ireland. The average value of exports to the EU fell 2% year-on-year to £4,300/t. However, in euro terms, export prices averaged around 15% higher.

The main driver of the overall decline in sheepmeat exports in March was reduced sales to countries outside of the EU, and in particular, Hong Kong. In the past couple of years, Hong Kong had developed as a significant buyer of low value sheepmeat cuts. However, this trade has fallen away since September 2014. Export volumes totalled just 100t in March 2015 compared with 1,700t a year earlier. Similarly, exports of low value product to Ghana also declined considerably. At the higher end of the value scale, sales to Norway and Switzerland also fell back. Despite increased domestic production and lower exports, imports of sheepmeat into the UK surged in March relative to a year earlier. At 15,000t, shipments were up by a third and reached a 5-year high. This will in part reflect the earlier Easter this year which meant that a higher proportion of the UK’s Easter import requirements had to arrive during March. The other driver of increased sheepmeat imports will have been the higher volume of product available for export in New Zealand (NZ), the UK’s principal supplier. With a drought leading to tight feed supplies, NZ producers had an incentive to market lambs earlier than usual and abattoir slaughterings subsequently rose considerably. During March, 12,800t of sheepmeat arrived in the UK from NZ; up 52% year-on-year. As a result, NZ sheepmeat accounted for 85% of total deliveries compared with 74% in March 2014. A further 10% of imports came from Australia; though, at 1,500t, they were down by 10.5% year-on-year. In terms of the EU suppliers, Ireland delivered 60% less sheepmeat than a year earlier and France supplied less too. However, slightly more came from Holland and Spain.

News Round up

During the first two months of 2015, sheep slaughtering at Spanish abattoirs decreased considerably relative to a year earlier. At 1.129m head, throughput was down by 18.5%. In numbers, this was a decline of 255,500 head. With carcase weights averaging 0.2kg (2%) lighter than in early 2014 at 11.3kg, sheepmeat production volumes fell by a fifth (3,200t) to 12,700t. Looking at the regional split, abattoir supplies fell at an above-average rate in three of the four regions to kill over 100,000 sheep in the first two months of 2014. The exception was Castilla Y Leon, the largest sheep slaughtering region; though numbers were still down by 16% there. With supply tight, light lamb prices in Spain were 25-35% above year earlier levels throughout January and February. In the Republic of Ireland, export abattoirs found supplies more plentiful through late April and early May than they had during the same period last year. During the five week period ending May 23, throughput rose by an annual rate of 6.5% to 191,850 head.

In New Zealand, the number of lambs slaughtered during April was up 2% year-on-year at 2.231m head. Carcase weights averaged slightly lower than 12 months before at 17.7kg. As a result, abattoir production was up 1.5% at 39,600t. Looking at the season-to-date figures, kill numbers have risen fractionally to 15.185m head in the 7 months to April 2015. However, due to smaller carcases, production volumes were nearly 1% lower. The main driver of lower carcase weights, which fell by an average of 0.2kg to 17.8kg, was a drought around the turn of the year which led producers to market lambs at a lighter weights due to poor grass growth. After a slow start to the season, drought conditions pushed up slaughterings significantly in December and January, but they then fell back in February and March. During December, 9.5% more lambs were slaughtered than 12 months before while the January kill was 35% higher. Beef + Lamb New Zealand expect the total number of lambs slaughtered in the 2014/15 season to be 2.5% lower than in 2013/14. Given that numbers were up slightly in the October-to-April period, this suggests that abattoir throughput will decrease in the coming months. However, it should be noted that the 2014 NZ lamb crop was 2.5% larger year-on-year and the estimated slaughter decline reflects an expectation that retentions for future breeding will increase significantly. In part this reflects an expectation that the rate of conversion from sheep farming into dairy production will slow. Australia exported 393,300 live sheep during the first quarter of 2015 (Q1). This was down by a fifth on the same period of 2014 when 493,500 sheep had been shipped overseas. Australia’s main customers for live sheep are in the Middle East. During Q1 2015, the largest market was Qatar, taking 95,000 head, closely followed by the United Arab Emirates with 90,000 head. These were shares of around 24% and 23%, respectively. Live sheep exports have been trending lower in recent years. Indeed, the first quarter totals for 2011 and 2012 exceeded 550,000 head and they had been above 500,000 head in Q1 2013.

Pigs

Prices and Supplies

Since the beginning of March, prime pig producer prices have been on a slow downward trend, contrasting with the historic pattern of a seasonal upturn. From 132.7p/kg dwt in the first week of March, the SPP had edged lower to 131.1p/kg in late May. This left the SPP down by a fifth when compared to the same week of 2014.

Weaner prices have been lacking direction in recent weeks. Prices for 7kg weaners have held in a narrow band around the £33 a head mark since February, while 30kg store pigs have been trading between £44 and £45 per head in most weeks. In the week ending May 23, prices were down by 19.5% yearon-year.

At UK abattoirs, prime pig supplies continued to run well ahead of year earlier levels into April. Slaughterings increased by 3.5% over the same month of 2014 and reached 970,700 head. This was the highest April total for 15 years. Supplies ran above year earlier levels in all three UK regions, rising in line with the UK average in both E&W and NI, but increasing by more than 6% in Scotland.

For a third successive month, there was a slight seasonal decrease in the average prime pig carcase weight at UK abattoirs. It slipped by 0.2kg on the month to 81.6kg in April. Nevertheless, this was still 1.1kg heavier on the year; a gain of nearly 1.5%. The 6% year-on-year increase in prime pig slaughterings at Scottish abattoirs meant that weekly throughputs were around 350 head higher than in April 2014 at almost 5,750 head. However, they still fell 200 head per week short of April 2013 levels. At 82,600t in April, UK abattoir pigmeat production was 3,600t (4.5%) above its year earlier level. A 5% increase in prime pig production to 79,200t more than offset a 4% decline in the output of sow meat.

 

GB household pork consumption volumes fell significantly compared to a year earlier in the 12 week period ending on April 26. Indeed, the volume of pork sold fell by more than 7.5% and 5% fewer households bought it. This was despite lower prices. Since prices averaged 5% lower, the amount of money spent buying pork was down by 12.5%. Looking at the sales performance of different cuts, the difficulties were most apparent in chops & steaks and loin roasting joints; both fell by more than 10%. Meanwhile, shoulder roasts were also significantly lower, down 7.5% year-on-year. However, leg roasts continued to buck the overall trend with volumes rising by nearly 3%. It therefore seems unsurprising that leg roasts had the largest price decline over the last year, of more than 13%.

By contrast, loin roasts, which saw the largest sales volume decline, became slightly dearer. After slipping back in late April, prime pig prices stabilised in the EU28 during May. The average Grade E pig price stood at €1.42/kg dwt (102p/kg) in the week ending May 24, up by a cent on the previous two weeks but down 3.5% on the €1.47 (105p/kg) reached in late April. Though this was 10% above its low point in late January, prices were still down by more than 13% year-on-year. Compared with late April, prices slipped by 6% in Belgium, Holland and Poland.

Meanwhile, German prices fell in line with the EU average (3.5%), there were smaller 1-2% declines in France and Spain, and Danish producers saw no change. Compared with May 2014, most of the major pig producing Member States have seen farmgate price declines of 10-15%. However, the decrease was more severe in Spain at one-fifth. In the year to late May, UK prices fell by 7.5% in euro terms, indicating a loss of price competitiveness. Indeed, the UK average has been trading at a 25-30% premium to the EU average since February, compared with less than 20% at the same time last year.

 

UK pigmeat exports were down 10% yearon-year in March 2015 at 17,150t. Although more cured product was exported, rising 5% to 1,350t, pork exports were 13% lower at 15,800t. With domestic production continuing to grow, it seems likely that UK pork exports were held back by the challenge of competing in a well supplied European market at a time when the exchange rate had strengthened.

The volume of pork exported to Denmark and Holland was down by 2-3% year-on-year while shipments to Germany and the Irish Republic were 8-10% lower. However, there was an even more significant one-third decline in shipments to Hong Kong and China. This meant that these two markets accounted for a fifth of pork exports compared with 28% in March 2014.

The UK imported 7% less pigmeat than a year earlier in March. Of the 48,300t total, 59% was pork and 41% cured pigmeat. This compared with a 57%:43% split in March 2014 as pork imports fell at a slower pace, down 4%, while bacon & ham shipments declined by 11%. With pork imports falling in March, trade with a number of the main suppliers was much lower than in the same month of 2014. Imports from France, Ireland and Germany contracted by more than a fifth while imports from Spain were down by 16% and Holland delivered 6% less pork. In contrast to the overall trend, two of the main suppliers did make inroads into the UK market; shipments from Denmark and Belgium rose by 14% and 21%, respectively. With bacon & ham imports falling significantly in March relative to a year earlier, the two largest suppliers, Denmark and Holland, saw declines of more than 20%. However, this was partially offset by a 64% increase in imports of cured product from Germany. This meant that Germany accounted for 21% of shipments, up from 11.5% 12 months before.

News Round up

Feed wheat prices fell significantly in the second half of April and into May. Although there has since been a price rally, after heavy rainfall in the key US winter wheat regions suggested that there could be some delays to harvesting, they remain cheaper than at the beginning of April. In North East Scotland, farmgate wheat prices traded at £109/t in the final week of May, compared with £103/t two weeks earlier but down from £118/t in late March. Meanwhile, barley traded at £103/t in late May, up £3 on the week, but below its range of £104-7 in most weeks between February and mid-May. Compared to the same week last year, wheat was down 30% and barley by 14%. Strong global crop production forecasts continue to place downwards pressure on the market.

Though soyameal prices edged higher in late May, they had fallen back significantly through April and early May on good prospects for soyabean harvests in the US, Argentina and Brazil. As a consequence, at £307/t, Hi-pro soyameal prices were down by approximately 3% on the month and were 8-10% lower than at the beginning of 2015. Relative to late May 2014, they traded at an 18% discount. On April 1 2015, there were 1.035m sows on Danish farms. This was up by just under 1% from a year earlier when the sow herd had stood at 1.026m head. Furthermore, it was an 8-year high and came despite a sharp fall in producer prices over the past 18 months. This may suggest that the most efficient businesses have remained profitable and willing to expand.

Looking at slaughter pig numbers shows a different picture. Indeed, the number of prime pigs weighing over 50kg lwt intended for slaughter was down by more than 2% year-on-year at 3.055m head, indicating that Danish abattoirs will face tight supplies in the coming months. Given the expansion in the breeding herd, the decline in slaughter pigs is a likely reflection of higher live exports; they rose by 14% year-on-year in Q1 2015 to just over 3m head. Looking at younger categories of pigs, the number of weaners on Danish holdings at the beginning of April grew by more than 4% to 5.566m head while the piglet population expanded by 2% to reach 2.608m head. A faster rise in piglet and weaner numbers than for sows implies increased herd productivity.

Kantar Worldpanel data shows that French households bought 1% less fresh pork in the 4 weeks to April 19 than they had during the same period of 2014. This was despite pork becoming 1% cheaper to buy and gaining in price competitiveness from beef and lamb which both became more expensive. Within the fresh pork category there was a 3% decrease in pork loin sales but a 20% increase across the other cuts, which had lower average prices - €6.30/kg (£4.50/kg) compared to €7.50/kg (£5.40/kg). Although sales volumes fell, fresh pork did better than cured pigmeat products. Indeed, there were 4-5% declines for ham, bacon and charcuterie products. These declines may reflect some price sensitivity as most categories of cured pigmeat saw slightly higher prices than 12 months before. Bacon was an exception; prices averaged 0.5% lower.

As of February 2015, the Chinese sow herd had contracted by 18.5% in just a year to 41m head. In terms of sow numbers, the annual decrease amounted to approximately 8m head. To put this into context, this is equivalent to the entire sow herds of Germany, Spain, Denmark, Holland and France. There was also a significant decline in the number of slaughter pigs on Chinese holdings with numbers down 10% to 390m head. The smaller proportionate decline in the prime pig population reflects increasing productivity in China as small producers exit the industry and the more industrial enterprises expand. According to Rabobank’s Pork Quarterly, there is still a long way to go before Chinese productivity catches up with other nations, with room for improvement in genetics and farming technique. Despite falling pig numbers, producer prices have been trending slightly lower over the past three years. During Q1 2015, piglet prices were trading at the equivalent of around 200p/kg while prime pigs were selling for approximately 135p/kg dwt.

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