Spring at last
UK pig prices stabilized during March in response to the recovery in most European markets, as better weather ushered in improved demand for pig meat across the continent. Although the Russian market remained blocked for exports of EU pig meat, concerns about future pig supplies from the US bolstered market confidence. BPEX launched a new price reporting system for GB pigs and their annual ‘Confidence Survey’ suggested growing optimism among producers.
Following a weak market during the early weeks of 2014, UK prices settled at around the 160p per kg mark during March. This followed a marked recovery in prices in most EU markets, primarily driven by lower pig supplies and better demand for pig meat as the weather improved.
The negotiations between the EU and Russian veterinary authorities on the possible reopening of the their market to EU pig meat remained deadlocked. With the current political difficulties between Russia and the EU, any early resolution of the dispute seems unlikely. Reports suggested that the price of meat in Russia had increased dramatically in the absence of EU supplies, although there was evidence that the Russian authorities were poised to lift previous import restrictions on suppliers from the US and Brazil.
The access problems to the Russian market had been a key factor in depressing EU pig prices in the early weeks of the year, but the rapid spread of the highly contagious Porcine Epidemic Diarrhoea Virus (PEDV) across the US and over the Canadian border has already had an impact on the availability of US pig meat for export. It is estimated that 5 million piglets have already been lost since the outbreak of the epidemic in mid-2013. The latest US pig census (March) already indicated a 3% drop in the US pig herd compared to the previous year. The uncertainty regarding future supplies of US pigs was described as the ‘wild card’ for the global pork market in 2014, in the latest Pork Quarterly Report issued by Rabobank.
The Deadweight Average Pig Price (DAPP) has been the standard GB pig price reporting mechanism for ten years and is widely used as a benchmark to set contract prices for pig producers in Britain. The DAPP was based on information provided to BPEX by processors. In January, both Cranswick and Karro declined to participate in DAPP reporting, because of concerns that the system was increasingly lacking in transparency, given that the larger number of higher welfare pigs was tending to inflate the price of standard pigs.
BPEX announced that a new GB APP (GB All Pigs Price) price would be introduced from mid-April and would run in tandem with the DAPP for a trial period of six months. It would be based on a similar specification to the DAPP but the data would be collected from sellers rather than buyers and would be reported two weeks after the pigs were killed.
In addition, BPEX would publish a GB SPP (GB Standard Pig Price). The data for the price of standard commercial pigs, based on information reported by processors, with the results published one week after the pigs are slaughtered.
BPEX reported growing optimism among producers, with the publication of their annual Confidence Survey. Despite the improvement in profitability, BPEX have previously reported that they do not expect any significant expansion of the UK breeding herd in 2014.
However, domestic pig slaughterings and pig meat production will show a modest increase in the coming year, as productivity will continue to improve. It was forecast that the UK breeding herd would rise from 412,000 sows currently to 425,00 by 2015.
Recent data from Agrosoft confirmed the recent improvements in efficiency recorded by British producers. For the key efficiency measure of ‘pigs weaned per sow year’, the average has now risen to 23 pigs, with over 25 pigs now being recorded by indoor producers. Despite the steady increase in recent years, British producers still lag behind most of their EU competitors, with Holland recording 28 pigs and Denmark over 29 pigs weaned per sow year.