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QMS (Quality Meat Scotland)

25 April 2013

QMS (Quality Meat Scotland) - April 2013QMS (Quality Meat Scotland) - April 2013

QMS - Quality Meat Scotland


Prices and Supplies

Scottish prime cattle prices closed March 16p/kg dwt higher than they had started the month with steers averaging 396p/kg dwt. Prices are consequently trading at record levels, 12% higher year-on-year and £1 a kilo above March 2011 levels. The prime cattle average at Scottish auctions has also been trading much higher than a month ago, standing at 221.6p/kg lwt in the week ended April 3, compared with 212.7p/kg lwt in the final week of February. In recent weeks, auction prices have averaged 9% higher year on-year.

The trade in cull cows has also firmed. Scottish auction prices have tracked last year’s levels, averaging around the 140p/kg lwt mark. Deadweight prices have been running ahead of early 2012 levels with a new record of 305.8p/kg dwt set at the end of March. This was 16p/kg higher than in the same week last year; an increase of 6%.

UK slaughter data for February showed that although prime cattle supplies remained tight, they trailed year earlier levels by a smaller proportion than in much of 2012. Slaughterings were 2% lower year- on-year during February at 154,900 head, following a 3% decline in January. The average carcase weighed 8kg lighter at 341.7kg as wet weather has stifled daily liveweight gain. The heifer kill was once again down by more than the steer kill and may suggest higher levels of retentions for future breeding.

However, young bull slaughterings were up 2.5% year-on-year as the effect of an increased number of male dairy calf registrations in the autumn of 2011 remains in the system. These cattle have been reaching target slaughter weights since the fourth quarter of 2012 (Q4), thereby lifting young bull supplies in recent months.

Having shown year-on-year growth for the first time in 17 months during January, Scottish abattoir throughput showed renewed tightening in February with numbers down 1% when compared with a year earlier. Nevertheless, this still marked a substantial change from last year where slaughterings had fallen by 10%. For the first time since October 2011 heifer slaughterings exceeded year earlier levels (though by just 0.1%), suggesting that a cycle of increased retentions for future breeding may be coming to an end. Meanwhile, 1.5% fewer steers were killed than in February 2012 and the recent run of increased young bull supplies came to an end with numbers down more than 3%.

During February, slaughterings of cows and mature bulls at UK abattoirs exceeded year earlier levels for an eighth consecutive month. It may be that the effect of wet weather on forage supplies has encouraged producers to remove their least productive breeding stock from their herds, and they have replaced them, where possible, with heifers. It is also likely that strong prices have drawn out stock.

Meanwhile, in Scotland, slaughterings of mature stock rose by 10% over February 2012. This increase, coupled with the reduction in heifer slaughterings, suggests a decline in potential breeding numbers.

UK Household purchasing data from market research firm Kantar Worldpanel showed a 1% year-on-year increase in beef volumes for the 12 week period ended February 17. Higher prices at the retail level meant that purchased volumes only edged forwards despite cash spending on beef strengthening 6%. Looking more closely at the data, prices for frying and grilling cuts were lower than a year earlier and this stimulated a 15.5% rise in sales. Mince purchases picked up by 2% despite being more expensive, but sales of stewing beef and roasting joints appeared to show more reaction to higher prices, falling by 4% and 5% respectively. Within the data there is some evidence of a negative impact on sales of processed product due to the horsemeat scandal. In the four weeks immediately after it came to light in mid-January, sales fell across a range of processed products. Burgers were hit hardest with sales down by 35% year-on-year, while chilled ready meals fell 20%, prepacked pies fell by 15% and frozen ready meals declined by 10%.

On average, prices for prime cattle across the EU have held relatively stable during March. While young bulls have eased by a couple of cents, cows are up one cent and young bulls have lifted by 4 cents (1%). However, Ireland has been a notable exception with the substantial trade links between the UK and Ireland likely to have had a considerable influence. This is reflected in the EU price for steers which has risen 4% since March began due to the heavy weighting of both countries in the EU steer average. Irish steers have risen 4% and UK steers 6%. A weakening in the Euro during March, however, means that most Member States have seen prices slip back a couple of per cent when they are converted into Sterling, thereby making them look more competitive to UK importers. Meanwhile, compared with one-year ago, Euro-terms prices for young bulls are on average 3% more expensive across the EU while cows have gone up by 6% and steers and heifers have shown 7% growth.

In 2012, UK beef exports totalled 119,600t and fell 22,750t (16%) short of 2011 levels. However, shipments made a quick start to this year, up 15.5% in January at 10,200t, helped by a slower rate of decline in domestic supplies. Nevertheless, January shipments were still 600t below those of two years before.

Deliveries to EU markets took a 95% share of the total in January 2013 compared with 93% a year earlier. A possible contributor was the significant slide in the value of the Pound over the course of the month against the Euro which supported the competitiveness of British product in key continental markets. There were significant lifts in sales to Belgium, France, Italy and Ireland, while shipments to Germany nearly doubled and deliveries to Spain increased by nearly a factor of 6 (albeit from a low base). The rise in exports to Ireland saw it replace Holland (down 4%) as the UK’s largest customer. The fall in shipments to Holland may reflect a shift in methods of product distribution as a significant volume of the beef sent to Holland is re-exported. By implication it is likely that more markets are now being supplied directly. There was an overall decline in deliveries outside of the EU to 417t from 585t a year earlier. However, Hong Kong and China bought more fresh product in January than in the whole of 2012 but held purchases of frozen beef constant.

Despite tight supplies and a stronger Sterling throughout much of 2012 the UK imported roughly the same volume of beef as it had in 2011 as lower imports of fresh product were offset by increased deliveries of frozen beef (much of which came in the lead up to the Olympic Games). Moving into 2013 and imports showed a 4% increase during January; a likely reflection of domestic supplies remaining tight plus higher exports.

In January, deliveries from the UK’s principal EU suppliers fell when compared to the beginning of 2012. Ireland sent 3% less beef as a 25% increase in frozen product was insufficient to offset a 7% decline in deliveries of fresh beef. While imports from France, Germany, Holland, Italy and Belgium also fell, there was a rebalancing towards Poland, Spain and Denmark. There was also some rebalancing of imports towards third countries. Indeed, imports from Brazil and New Zealand more than doubled while Namibia sent nearly three times as much as a year earlier. In addition, shipments from Uruguay and Australia rose by 26% and 31% respectively. Argentina was the exception, however, with imports falling to just a quarter of January 2012 levels.

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Slaughter data for Ireland’s export plants has shown throughput running ahead of year earlier levels in the first quarter of 2013 (Q1). Numbers rose by 8% year-onyear as 276,200 prime cattle were slaughtered during Q1. A small contributor to the increase will have been a reduction in live exports of finished cattle which have fallen by 2,025 head year-on-year (20%) to 7,950 head. However, the rate of expansion slowed considerably in March, and although monthly throughput was 2.5% higher, it actually fell behind year earlier levels in the second half of the month. Compared with two years ago throughput was 7.5% lower in Q1 and 20% lower in March.

The USDA forecasts that Russian beef production will rise 3% in 2013 to 1.39mt. While higher production will in part be the result of higher feed costs, and hence increased liquidation of breeding stock, improvements in productivity due to better management have also been factored in to the estimate. Nevertheless, imports are still expected to grow this year due to a slight loosening of market access restrictions. During 2012 Russia imported 730,800t of beef; up 3% year-on-year. 75% of the total came from just three countries – Brazil (39.5%), Paraguay (19%) and Belarus (16.5%). In attempt at reducing its requirement to import large volumes of beef to satisfy domestic consumer demand, the Russian Government is to make funds of around £50m available to support domestic beef production. The support measures include £8.5m to help producers purchase genetics plus interestfree loans with a fifteen year maturity to help farmers expand their enterprises.

Meanwhile, McDonalds is looking take advantage of Russia’s fast-growing foodservice sector. Their number of stores is to rise to approximately 550 in 2015 from around 400 at the end of 2012. With Russia being an emerging middle income economy, although its overall beef consumption per person is not growing, its consumers are changing the outlets from which they purchase it. According to the food industry consultancy, Gira, turnover at fast-food companies in Russia has been growing by 24% a year over the past decade.

In the final week of March the USDA estimates that US abattoirs slaughtered 599,000 cattle. This figure was 0.5% lower than in the same week of 2012, reflecting tighter supplies as a result of continued declines in the country’s cattle population and last summer’s drought which brought slaughtering forward. During Q1 as a whole the decline was even more significant as abattoir throughput fell by 3% year-on-year to 7.64m head. But since production volumes, at 2.74mt, were just 2% below year earlier levels, it indicates higher average carcase weights and suggests that mature stock took up a greater proportion of the kill. As a consequence of tighter supplies, producer prices have been slightly higher than last year’s levels. At the end of March, steer carcasses traded at a 0.6% premium to last year at a price of $4.50/kg dwt (£2.95/kg dwt), while live prices were up nearly 2% on the year at $2.80/kg lwt (£1.85/kg lwt).

A significant change in Japanese monetary policy late last year has resulted in its currency, the Yen, depreciating in value by around 10% against the US Dollar. Furthermore, when compared with early last year the currency has lost 20% of its value. With this meaning that at constant Dollar prices more Yen are now required to secure the same volume of overseas product, imports of beef have fallen. In Q1 2013, Japan’s principal supplier, Australia, delivered 5% less beef than a year earlier, at 62,300t, while the number two supplier, the USA, supplied 11,000t of beef in February; a 3% year-on-year decrease. Total Japanese beef imports for February were 30,700t; down 23% on the year and at a 37-month low. Imports from the US fell at a slower pace than the total despite tight US supplies as trade was helped by the relaxation of a previous BSE-related regulation. Imports of beef from US cattle aged younger than 30 months are now permitted, whereas prior to February it could only come from animals aged less than 20 months. While there was actually a 5% year-on-year increase in imports of fresh US product to just over 5,100t during February, deliveries of the more price-sensitive frozen cuts declined by 11%. The average price paid for chilled shoulders and rounds from the USA rose 16% on the year to around £4,200/t at current exchange rates, while frozen brisket was nearly a third more expensive at £2,900/t.

Uruguay has achieved considerable growth in its beef exports to China in the recent past. During 2012, the total volume shipped was more than 80% higher than in 2011, at 21,150t. Continued growth early in 2013 saw February deliveries increase by a factor of five compared with the same month last year. Monthly shipments of 5,200t were 24.5% of last year’s annual total. In three of the six months between September and February, China was the largest buyer of Uruguayan beef.


Prices and Supplies

Although deadweight hogg prices slipped back 5p/kg in the final week of March, they still closed the month more than 80p/kg dwt higher than they began it. At 450.4p/kg in the week ended March 30, prices were close to a ten-month high and 4.5% below year earlier levels, having averaged 18.5% lower in February. Scottish auction prices also showed significant growth in March, rising by 40p/kg lwt on the month to stand at 207p/kg lwt in the week ending April 3. Although prices had slipped back below the £2 a kilo mark in late March, they then recovered despite the end of the Easter trade and unfavourable currency movements related to the economic crisis in Cyprus. Lower numbers may have supported prices as snow slowed the movement of stock to auctions and abattoirs. However, this had also the case in the previous week when the market had cooled.

As a consequence of the increased carryover of hoggs, 13% more prime sheep were killed by UK abattoirs than a year earlier in the opening two months of 2013. This followed a 5% expansion in December. However, product volume increased by only 9.5% to 38,000t as the average carcase weighed 19kg compared with 19.7kg a year earlier. Nevertheless, this greater volume of product is likely to have placed considerable downwards pressure on producer prices, which averaged £1 a kilo deadweight lower on the year (22%) in January and February.

In Scotland, abattoir throughput grew more slowly than elsewhere in the UK, rising just 2.5% year-on-year in the first two months. Moreover, once lower average carcase weights have been accounted for, output of prime sheep meat actually fell 1.5% yearon-year. Scottish government data shows that numbers tightened in the first half of February, before recovering towards the end of the month. This was despite increased auction numbers throughout the period and suggests that fewer producers have been selling directly to abattoirs. Tighter supplies in Scotland relative to the rest of the UK may help explain why prices at Scottish auctions have been trading at a premium to England and Wales in recent weeks having been broadly similar for much of 2012.

One potential factor behind increased producer prices could be increased carcase quality. Indeed there is some evidence of this as the proportion of hoggs in the deadweight price reporting sample achieving at least an R3L grade averaged 56.7% during March 2013, compared with 49.8% in March 2012. Anecdotal evidence also suggests that there has been a notable improvement in the quality of hoggs being sold through the auction ring since late February. The proportion of lighter weight hoggs in the deadweight sample remains high by historical standards. In the week ending March 30, 15% of hoggs were in the lighter 12-16kg category compared with just over 8% in the same week of 2012. Prices in this category have been trading approximately 20p/kg dwt cheaper than in the heavier weight class.

However, some more robust evidence of upwards pressure on market prices comes courtesy of Kantar household purchasing data. It shows that in the twelve weeks to February 17, lamb sales volumes improved by 22.5% on the year; a considerable shift from the more modest year-on-year growth rates observed between Easter and Christmas 2012. Leg roasting joints accounted for much of the increased sales with heavily discounted prices in the period from mid-January to mid-February driving volumes. Nevertheless, data for the four weeks to February 17 show higher sales of mince, steaks and shoulder roasts despite more modest retailer discounting. This may reflect improved competitiveness of lamb retail prices relative to beef, as well as some substitution of carcase meat for ready meals in the wake of the horsemeat scandal. It is also likely to reflect the greater availability of sheepmeat with overall UK market supplies rising by 11.5% year-on-year in January.

In contrast to the market for prime sheep, cull ewe prices at Scottish auctions had been holding relatively steady at around the £45 a head mark since October. However, this changed in the week ended March 20 as prices jumped to nearly £55 a head; a 28-week high. A sharp reduction in numbers may well have driven this change as it is likely that ewe prices had been held down in recent months by auction numbers generally running 15-20% ahead of last year’s levels.

At the UK level, slaughter data for the first two months of 2013 showed a 12% increase in the number of ewes and rams being culled when compared with the same period of last year. Broadly similar carcase weights meant that production volumes also rose by 12%.

Farmgate prices for heavy hoggs in Ireland failed to keep up with the growth in GB prices during March. In the week ended March 31, Irish prices had risen by 15% in Euro terms and by 13% in Sterling terms over the previous four weeks, compared with respective increases of 24% and 22% in GB. While French and Dutch farmers were also paid around 15% more in Euro terms for their hoggs than at the start of March, prices in Germany and Spain only edged forwards. As a consequence, German and Spanish prices remain 12% and 18% lower than a year earlier while prices in most other Member States traded closer to 5% lower.

With around one-third of UK sheepmeat production exported and a similar volume imported, trade flows, and consequently exchange rates, can have a significant influence on the market. Whereas in Q4 2012 a Euro was worth an average of 81p, its value rose in Q1 2013 to an average of 85p. Therefore, at the end of 2012 if a consignment of lamb was delivered to the continent for €5,000/t it would have returned £4,040, but then in Q1 2013 this return would have risen to £4,250. This difference would allow an exporter to charge a lower price in Euro terms to lift sales volumes while maintaining or increasing their average Sterling price, potentially leading to a large increase in sales in Sterling terms. Meanwhile, Sterling has also weakened against the currencies of Australia and New Zealand in Q1 2013, and this has subsequently placed upwards pressure on import prices.

Latest available export data shows that the UK shipped its highest January volume of lamb for five years with 7,150t exported. This was an increase of 7.5% on the year. Growth was assisted by increased domestic production and an improved competitive position due to the aforementioned exchange rate movement coupled with lower farmgate prices.

This improved competitiveness of UK product allowed exporters to make some headway in France, the UK’s largest customer, where, according to Kantar data, a tough economic climate led overall lamb consumption to fall by 16% year-on-year in January. Having trailed year earlier levels by 16.5% in Q4 2012, exports to France were a fraction higher in January 2013 than in January 2012 at 4,000t. There was also a turnaround in deliveries to other EU markets with shipments to Germany, Italy, Holland, Austria, Spain and Portugal all showing growth. By contrast, increased production in Ireland reduced its need to buy lamb from the UK, while the Belgian market also proved sluggish. Non-EU markets accounted for 16% of exports (1,100t) with the vast majority going to Hong Kong, which has been the UK’s second largest customer since last October. The bulk of the product exported to Hong Kong has tended to be at the lower end of the value scale.

Imports exceeded year earlier levels for a sixth consecutive month in January with shipments totalling almost 7,500t compared to 6,600t in January 2012. Interestingly, despite falling producer prices and much higher production in New Zealand, its shipments to the UK were fractionally lower than in the opening month of last year (though they did increase for a fourth successive month). The majority of the year-on-year increase in imports can be attributed to Australia and Ireland where sheepmeat was readily available at the turn of the year.

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In Ireland, slaughter numbers have been running at a substantially higher level than last year. In the first quarter of the year 508,250 lambs were slaughtered at Irish export plants. This increase of 133,200 on the year means that slaughterings have risen by more than one-third. It is also well in excess of the increase of 57,000 hoggs reported in Ireland’s December 2012 Livestock Survey and may well indicate tighter supplies in the coming weeks. In terms of breeding ewes, the survey showed a 2% increase to nearly 2.58m head.

Slaughter data from Statistics New Zealand show that the country killed 2.84m lambs in February; a 4-year high for the month. This was up 17% from a year earlier and an increase of 40% when compared with February 2011. Nevertheless, significant industry restructuring in recent years means it was still more than 20% below the numbers slaughtered in February 2008. For the first two months of the year slaughter data shows that just over 5.5m lambs were killed; a 15% year-on-year increase. As a consequence of increased slaughterings, New Zealand’s exporters have had more sheepmeat to sell overseas. Lamb and mutton export volumes were up by 29% year-on-year in the opening two months of 2013 at approximately 80,000t; a three-year high for this period. With January UK trade data showing similar deliveries from New Zealand to January 2012 it appears that New Zealand has continued to gain traction for its exports in South East Asia, and China in particular.

In the eastern states of Australia, the lamb kill totalled 330,000 head in the five weeks up to the end of March. This 6% increase on the year came despite the earlier Easter holiday leading to one fewer slaughtering day. Meanwhile auction markets showed a 12% rise from the same period of last year, with Victoria showing the largest growth in numbers. The rate of increase in slaughterings of mature stock has been even more pronounced due to a period of warm, dry weather which has resulted in reduced feed supplies. Abattoirs in eastern states killed 87% more ewes and rams than a year earlier, implying tighter supplies later in the 2012/13 season.

While the US sheep sector is very small relative to cattle and pig production, its abattoirs still produce a significant quantity of sheep meat. While USDA data for Q1 2013 showed slaughterings up 2.5% at 500,000 head, considerably lighter carcasses meant that production volumes slipped back by 2.5% to 16,400t. Despite a reduced volume of domestic production so far in 2013, ex farm prices for slaughter lambs traded 22% lower on the year at the end of March at $2.55/kg lwt (£1.65/kg lwt).

Although US lamb exports averaged nearly 11,000t per annum over the past decade, they have shown significant volatility from year-to-year. In 2012, US lamb exports totalled 13,100t, down 28.5% on the year but up 22.5% from 2010. 2012 receipts summed to $26.2m (£17m), 13% lower than the previous year’s record of $30.1m (£20m). Mexico was the largest buyer in 2012, taking delivery of 77% of the total at an average value of $1,380/t (£900/t). Of the other markets, deliveries to Canada totalled 1,600t at an average value of $2,780/t (£1,820/t); to the Caribbean they were 930t at $5,200/t (£3,400/t); and the EU purchased 166t at $6,870/t (£4,480/t). Shipments to the EU were just 11% of their 2011 total and at their lowest since 2004. Looking at data for the first two months of 2013 shows a sharp decline in total US lamb exports to just 630t compared with 1,160t in the same period of 2012. Though deliveries to Mexico rose by 5% to 480t, shipments to most other destinations were down 60-90%.


Prices and Supplies

In Q1 2013 prime pig prices have followed a similar trend to the previous two years. They initially softened, due to seasonally sluggish consumer demand, before picking up through March. In the week ended March 30 deadweight prices averaged 158.21/kg dwt; a nine-week high. This was 10.5% higher than in the same week last year. However, since prices have risen at a slower pace than in March 2012, this gap has narrowed from 12% in February.

Defra slaughter data for February continued to show rising pig slaughterings at the UK level. Abattoir throughput increased by nearly 2% on the year to 783,100 head. When combined with heavier carcase weights (79.8kg vs 79.3kg a year ago) and a 6.5% increase in the number of sows being culled this meant that, during February, the UK produced 2.5% more pigmeat than a year earlier.

Prime pig slaughterings in Scotland continued to run at approximately 6,400 pigs per week during February. Numbers are now just under half of what they had been prior to the closure of slaughtering facilities in Broxburn. The average carcase of a pig slaughtered in a Scottish abattoir weighed 77.5kg in February, compared with 79.1kg in February 2012. This was also 3% lighter than in the UK as a whole.

Data from Kantar for UK household pork consumption in the 12 weeks to February 17 showed a 6% decline year-on-year. As has been the case since late 2012, it would appear that falling consumption has been caused by higher retail prices (up 8%). However, data on the individual cuts indicates that there is more to the change in consumption than simply price rationing. Pork loin roasting joints continued to show growth despite further gains to prices as spending jumped by more than 50% from a year earlier. By contrast, the volume of leg joints purchased fell 16% despite prices averaging 2.5% cheaper.

Weaner prices rose during March having held steady in January and only edged forwards in February. This may reflect some anticipation of better prices for finished pigs in the coming months as December census figures showed 3% fewer fattening pigs on UK farms, implying that pig supplies will begin to tighten. A slight easing of feed wheat prices may also have boosted producer confidence. At £48.80/head in the week ended March 30, 30kg weaners sold at a 6% premium to last year and were at their most expensive since the opening week of August 2010.

Cull sow prices lifted by 2% during March to 107.5p/kg dwt. While the price has risen 16p/kg dwt from its late January low point, it remains well behind last year’s levels when the market had reached its annual peak of 124.7p/kg dwt at the end of March. With the UK sow market highly sensitive to trade developments, a lower price than last year despite a more favourable exchange rate implies weak demand from the continent for UK sow meat. It may also reflect increased production, with the UK sow kill up 2% year-on-year in the first two months.

UK prices for Grade E pigs finished March at €1.81/kg dwt, nearly 6% more expensive than the EU average of €1.71/kg. However, this difference had recently been as little as 1% and the change was driven by the combination of a marginal fall in EU prices, a seasonal lift in UK prices, and a 2% strengthening in the value of Sterling against the Euro. Although this reduced the competitiveness of UK product on the continent, they had opened 2013 at a 12-13% premium. In Sterling terms, there have been similar movements in the UK price premium. As Q1 drew to a close the EU average was unchanged from the start of the year but 5% higher than a year ago. Although the EU average may have shown little change in Q1, there have been movements in prices across the Member States. For example, while French and Spanish producers have seen 5-6% growth, farmers in the UK, Denmark and Italy have seen the reverse. Compared to a year ago, prices have moved quicker than the EU average in Denmark (+7%), the UK (+8.5%), France (+9%) and Spain (+12%). However, in Italy, prices are unchanged, while Belgium, Germany and Poland prices have only edged 1-1.5% higher over the past year. Dutch producers have fared a little better, receiving 3% more for their pigs.

There was a strong start to the year for UK pork exports, rising by 9% on the year to 12,150t. This was the sixth month in succession that shipments have exceeded year earlier levels with the Chinese market accounting for much of this growth. On the supply side, the combination of higher domestic production and lower volumes purchased by UK households have given exporters a greater volume of product to work with in recent months.

In January the UK imported 1% more pork than in the same month of 2012. Deliveries increased by 250t to 27,900t. Denmark was the largest supplier, providing 8,400t; almost 30% of the total. Meanwhile Germany took second place with 5,750t, making up approximately one-fifth of total imports.

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Feed wheat prices have eased back since February with May futures contracts generally trading at just under £200/t in London. Farmgate prices in the North East have slipped back around £10/t on the month to £205/t, and delivered prices in Central Scotland have eased by £5/t to £216/t. Improved prospects for global supplies in the 2013/14 crop year appear to have alleviated some of the pressure caused by tight domestic supplies and the UK’s increased import requirement. Meanwhile, soyameal prices have drifted higher as Brazil has found it a challenge to deliver its record soyabean crop to ports, and the world’s major importer, China, has subsequently had to dip into its national reserves. A weaker Sterling against the US Dollar (by around 6% since the turn of the year) has also hindered importers.

Eurostat data shows that the EU slaughtered nearly 2% fewer pigs during 2012 than it had in 2011. Abattoir throughput totalled 21.9m head. Looking more closely at the monthly data shows significant volatility surrounding the average decline as two months (January and October) showed significantly higher slaughterings and four months showed little change from year earlier levels. The largest declines were in September (-10%) and December (-8%). In the year as a whole, there were considerable falls in Danish and Polish slaughter numbers of around 6.5%, while in Holland, France and Germany numbers fell by close to the EU average. By contrast, the Spanish and Italian abattoir sectors expanded their pig kill by 1% and 3% respectively. Moving forward into January 2013, abattoir throughput has picked up in five of these seven countries from a year earlier (by between 3.5% and 7.5%) and fallen in one (Denmark -4%). Data for Italy is yet to be released.

In Q1 2013, US abattoirs slaughtered 27.65m pigs and this produced almost 2.06mt of pigmeat. While throughput fell 1% year-on-year, lower average carcase weights mean that production fell 1.5% behind Q1 2012 levels. This suggests that higher feed costs following last year’s drought have encouraged farmers to slaughter pigs at lighter weights. However, at the end of March the USDA estimated that weekly slaughterings were up by close to 3% on the year at 2.18m head, suggesting that supplies may have turned the corner. A sharp fall in farmgate prices since the beginning of March may therefore reflect a better supplied market, particularly as five-year average price data shows that the market tends to be very stable in the opening quarter of the year. Producer prices stood at approximately $1.60/kg dwt (£1.05/kg dwt) at the end of March; 8% lower than in the same week last year.

Meanwhile, with supplies proving tight, and producer prices significantly higher than their average over the past 5 years, US pork exports made a slow start to the year, falling by 14% year-on-year in the first two months to 275,600t. While the closure of the Russian market in mid-February (due to concerns over the use of the feed additive, ractopamine, in US pig production), had an impact it was only marginal in terms of overall export volumes. The greatest downward impact came as a result of lower shipments to China, which fell by more than half to 20,500t. There was also an impact from lower shipments by around 10% to the USA’s two largest markets of Mexico and Japan, falling by 8,000t and 7,000t respectively to 72,350t and 69,400t. Meanwhile, a recovery in Korean production saw its imports from the US fall 26% year-on-year to 23,300t. Canada was the only large US pork customer to increase deliveries at the start of this year, with imports up 5% on the year to 34,250t.

April 2013

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