QMS warns of volatile 2015 for pig market

Quality Meat Scotland (QMS) has warned against a turbulent year for values in the pig market. 

According to the latest analysis by QMS, European pig slaughterings in the first quarter of 2015 were almost 2% more than last year and the volume of meat produced rose by about 3%.

Stuart Ashworth, QMS head of economics services, explained the year-on-year change: “The loss of export markets in Russia in February 2014 resulted in EU pigmeat exports falling by 5% during 2014, despite growth in exports to other countries, particularly China, Japan and South Korea.”

He believes that, with Russia still excluding EU pigmeat, the growth in sales to other markets is “vital to maintaining demand”. However, due to a recovery in US production, export volumes may be maintained with values varying significantly, especially when the stored pigmeat comes back into the market.

“History tells us that pig prices would be expected to rise between now and late summer and a forecast of lower slaughtering volumes would support this expectation.”

He added that the proper management of the stored pigmeat will also be key to the sector.

“Carefully managing the removal of frozen pigmeat stored under the recent aid scheme, which must occur in most cases after 90 days of storage, will be important in maintaining some stability in the market.”

Ashworth does believe that the scheme, introduced to stabilise the pig market, was of some help, but not necessarily to UK producers.

“From a low of around €1.30/kg dwt (£0.94/kg) in late January, prices rose to around €1.47/kg dwt (£1.07/kg) in late April when the scheme closed,” he said. “However, the aid scheme has now ended and prices have slipped to €1.41/kg (£1.02/kg).

“UK pig prices are well above the EU average and, during the period of private storage, UK pig prices quoted in euros remained broadly steady at around €1.80/kg (£1.31/kg). This left prices, in euro terms, 6.5% lower than last year. The challenge here, of course, is that Scottish producers do not get paid in euros but in sterling, where the price is down more than 20%, leading to some nervousness among producers.”

The QMS data also revealed that, across Europe as a whole, despite the influence of private storage aid, prices were almost 14% lower than a year ago, with the major pigmeat producers seeing falls of 10% while Spain saw a 20% drop year-on-year.

“Perhaps not surprisingly, Spain has been a large user of the support scheme while the UK put very little pigmeat into store,” he added.

According to Ashworth, the producers have benefited from lower feed costs for the period. “Feed wheat is down 35% year-on-year and by nearly 50% from two years ago. Meanwhile, soya meal is around 15% cheaper to buy than in May 2014 and 20% lower in price than two years ago.”

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