A better year in prospect
Danish pig producers are expected to see better times in 2013, but it is likely that any significant improvement in margins will only occur in the second part of the year. The future trend in weaner exports remains virtually impossible to predict.
The Danish breeding herd remained virtually unchanged in the December census and a stable level of production is forecast for 2013.
||13 vs 12
Source: Danmarks Statistisk
Although pig production will remain stable during 2013, the big conundrum will be the level of weaner exports. Current forecasts suggest that these will rise from around 9.2m to 9.8m this year, but this could change very rapidly, either way, according to market circumstances. Currently, high feed prices are putting the lid on weaner prices but there will be strong demand over the year from Germany and Poland, where sow numbers are already in decline. In January weaner exports rose to 835,000 head compared to 688,000 in 2012.
There has been interest expressed in the schemes offered by Danish Crown and Tican to expand finisher capacity, but securing finance for new investments remains difficult. There is anecdotal evidence of some producers 'refilling' finisher housing that was 'emptied' during the last couple of years, when decisions were made to ship weaners to the German market.
Danish pig farms did fairly well during 2012 but high grain prices were a major factor and only the more efficient producers showed a profit on the pig enterprise taken in isolation. It is estimated that, on average, farms provided 60% of the grain used in pig production – but with significant variation around this average.
New Danish price forecasts for 2013 are due shortly and price expectations will almost certainly be revised downwards. This is due to expected pressure on export markets, due to higher than expected production in China, Russia and the US and the strengthening of the € in recent months – up by 5% vs the $, 7% vs the £ and 17% vs the Japanese ¥.
The 'private' pig slaughterhouse sector in Denmark has been in some difficulty in recent years. The recent closure of Jutland Meat was welcomed in the co-operative sector as it released an additional 12,000 finished pigs per week onto the market – a total reckoned to be close to the current 'overcapacity' in the rest of the industry.