The GB pig market is exhibiting some early indicators of seasonal uplift following downward stress in the beginning of this yr, new evaluation reveals.
The GB Commonplace Pig Value (SPP) pig value has been trending comparatively steady in February and March.
Nevertheless, there have been some indicators of seasonal improve when the lightest and heaviest pigs are faraway from the value reporting pattern.
Costs paid for carcases weighing 70-104.9kg have edged greater in 5 of the final six weeks, rising 0.4% from a year-to-date low of 212.55p/kg to succeed in 213.43p/kg within the week ending March 23.
High quality Meat Scotland (QMS) says that regardless of proof of a slight seasonal upturn, costs have nonetheless slipped behind year-earlier ranges for the primary time in two years.
Nonetheless, they had been up 35% on their five-year common in mid-March, reflecting the sharp market rebound between spring 2022 and 2023.
Pig producers will likely be relieved that the value of feed has been falling. Defra’s animal feed value sequence reveals that grain costs in January had been down 25-30% on 2023 ranges.
Protein meal costs have additionally fallen sharply since a quick rebound in autumn 2023, taking them down over 20% on the yr.
Since then, market information means that there was additional downwards stress on each grain and protein meals, though grain costs have rebounded barely within the second half of March.
QMS market intelligence supervisor, Iain Macdonald says: “These developments replicate a well-supplied international arable crop market, supported by components resembling an enchancment in Ukraine’s export capability and beneficial rising climate in South America.
“A stronger sterling in opposition to the US greenback than in early 2023 has additionally helped.”
Though wages have been rising rapidly and vitality and borrowing prices stay elevated, the present stability between manufacturing prices and output costs means that pig producers’ funds are slowly recovering from the monetary disaster of 2021/22.
“Nevertheless, given the dimensions of that disaster, there’s nonetheless an extended approach to go,” Mr Macdonald explains.
Defra slaughter information confirmed an 11% decline in prime pig throughput at GB abattoirs in 2023 and the development continued in the beginning of 2024, down one other 4% within the first two months.
Whereas December pig census outcomes aren’t obtainable for Scotland, England’s outcomes present that ending pig numbers had been nonetheless down by 11% year-on-year, and by 18% on the height reached two years earlier than.
“Sow numbers in England did present a marginal rebound in December 2023, however they had been nonetheless 19% decrease than in December 2021.
“So, whereas there may very well be some restoration within the second half, there’s little room for any important rebound in prime pig slaughter in England in 2024,” Mr Macdonald says.
Given the sharp discount in home pork manufacturing since 2022, the exterior commerce stability has been supporting availability for consumption.
UK export volumes fell by practically 1 / 4 in 2023 and whereas imports fell barely within the yr as a complete, they had been greater than in 2022 between April and the year-end.
Mr Macdonald says greater import volumes have been supporting market provides for practically a yr, and import costs are likely to intently comply with developments in EU pig costs.
He says: “After six months buying and selling at a small low cost of solely round 5% to GB ranges, EU pigs turned comparatively low cost within the second half of 2023 and the value hole widened past 20% in early 2024.
“Nevertheless, there was a robust seasonal rebound within the EU since February, and the value hole dipped to 13% within the third week of March.”
Whereas EU pork stays aggressive, it isn’t as low cost because it seemed over the winter, and EU provide stays basically tight.
“Though there was some restoration within the EU sow herd in December 2023, numbers had been nonetheless 7% beneath pre-covid ranges,” Mr Macdonald explains.
“As well as, fattening pigs had been nonetheless exhibiting a year-on-year decline of two.4%, highlighting that, like at dwelling, any restoration in EU pork manufacturing is more likely to be weak.
“Consequently, the downwards stress on the home market from EU imports is more likely to stay restricted.”
Trying additional afield, he notes that the USDA is anticipating elevated international commerce this yr, with a key driver being China.
China’s pork manufacturing rose sharply late final yr as loss-making producers liquidated herds.
Consequently, numbers are anticipated to tighten in 2024, leading to greater import necessities as soon as shares constructed up in 2023 have been used up.
Though pork costs have dipped seasonally since Chinese language New Yr, wholesale costs proceed to look comparatively engaging, holding above GB farmgate value ranges, and the Chinese language market has typically risen between spring and autumn.
By 2023, UK exports to China had fallen again to round the place they’d been earlier than China’s extreme pork scarcity of 2019 and 2020.
Nevertheless, at a share of 36%, they made up a considerably greater proportion of UK exports than within the pre-African swine fever interval, highlighting China’s place as a significant market outlet for processors trying to obtain carcase stability.
