Outlook for 2013
Pig market pundits continued to point to a number of conflicting factors, which will make 2013 a difficult year to call. Most seem to be revising down earlier forecasts of price increases but the impact of the new EU pig welfare regulations will remain a conundrum for the time being.
The Agricultural and Horticultural Development Board (AHDB) held their ‘Outlook 2013 Conference’ during February. As usual, it provided an opportunity for the red meat industry to take stock of the many factors which may have an impact on their marketplace in the year ahead.
The main conclusions emerging from the day were as follows:
- The recovery of the UK economy will be painfully slow over the next couple of years, due to continuing lack of consumer confidence, with the resulting propensity to pay off debt and build savings rather than spend.
- It is likely that the Euro will continue to make gains against most of the major world currencies, including Sterling.
- Increasing pig production in Brazil, China, Russia and the US may limit opportunities for EU exports to the main world importers. In China, however, the improving economic outlook will probably mean that consumption will increase more rapidly than production and demand for imports may improve in the latter half of the year. The continuing trade dispute between Russia and the US may create opportunities for EU exporters.
- The impact of the new EU pig welfare rules has yet to manifest itself. Production was already starting to fall during the latter months of 2012 and it is most probable that we will see a more significant contraction of supplies during the second half of 2013.
- UK pig slaughterings reached 10m during 2012 but are forecast to decline to 9.8m in 2013 (down 2%) due to a decline in the breeding herd. Although productivity will continue to increase, the rate of improvement will slow.
- Although prices of feed wheat and soya have fallen off their previous peak in recent weeks, the outlook for 2013 is for continuing volatility due to low carry-over stocks and the possibility of further extreme weather events globally during the year.
- Pork consumption within the EU may be affected by higher prices and a less competitive position against the other red meats and poultry.
A copy of the presentations made at the conference can be downloaded from the BPEX website.