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UK outlook

Despite a downbeat view of the overall economy, a steady increase in UK pig production was forecast over the next two years at the AHDB Outlook Conference in May.

The UK dairy and livestock industries held their annual Outlook Conference on 2nd May and reviewed the current state of the domestic economy and key consumer trends and also took a detailed look at the outlook within the dairy and red meat sectors.

Some of the main conclusions reached during the conference presentations were as follows :

With a decline in consumer incomes and a persisting lack of confidence, UK economic recovery will remain shaky. Low investment by the corporate sector remains an issue but there is some evidence of returning optimism. Export performance will be crucial but continuing problems in the Eurozone, leading to a weaker Euro, will slow UK export growth.

Consumer confidence remains fragile and a cautious, risk averse market environment will result in retailers continuing to put a focus on price ‘deals’.

Output in the dairy and sheep industries will remain stable over the next couple of years but beef production is expected to decline by 2.5% from 2011 levels.

In the pig meat sector, pig prices are improving but feed costs remain high and the outlook remains uncertain. Grain supplies are more plentiful but the position on maize will remain tight, driven by the increase in usage for energy production in the US. Strong demand from China with its expanding livestock sector will keep soya and other protein prices high. As ever, the weather will continue to play a major role in creating volatility across the globe.

There is likely to be some growth in UK pig production in the next couple of years and the impact of the EU 2013 stall ban will almost certainly result in lower EU pig supplies from 2013 but much will rest on the approach to enforcement in countries where there are currently very low levels of compliance.

Forecast UK Pig Production
Clean pigs

2010 (Act.)  9.2m 
2011 (Act.) 9.8m
2012 (Est.)  10.0m
2013 (Est.)  10.1m

Source : BPEX

In the shorter term, UK pig prices continued to move ahead during May – as shown by the DAPP price estimates. There was little change in the cost of feed raw materials and there was a small improvement in the DAPP vs Feed Price Ratio. However, the current weakness of the Euro vs £ may put a brake on further price improvements.

Both UK pig production and the quantity of pig meat processed also showed a small increase during the first quarter.

UK Pig/Pig Meat Production

2012 2011 % change
Pigs (m. head) 2.5 2.4 +2
Pig Meat (000 tonnes) 206 202 +2

Source : DEFRA