Pig price improvement dulled by price feed rises

An improvement in pig prices is said to be overshadowed by a surge in the price of feed, according to Quality Meat Scotland (QMS).

In the past six weeks, pig prices have risen by 1.25p/kg to 150.62p/kg, which QMS head of economics services Stuart Ashworth said was the result of fewer pigs reaching UK abattoirs between May and June this year. However, Ashworth added that more pigs have reached abattoirs during the last six weeks than the same period last year.

Ashworth said: “Historically prime pig availability increases in the second half of the year, although early indications are that, during July 2012, UK supplies were little changed from June 2012, which would be consistent with the smaller sow population reported in the December 2011 census.”

QMS reported that during the first four months of this year, European pig meat production was less than 0.5% higher than last year, but that availability is expected to improve in Q3 before falling behind earlier levels in the final quarter. However, QMS said it remains unclear how some EU member states will adapt to the full implementation of the stalls and the tether legislations on 1 January 2013 and Ashworth said there “may be some liquidation of herds ahead of this date”.

European pig prices are up about 7% on last year, but when the prices are converted to sterling the value is between 4-5% lower, making European pigmeat cheaper on the UK market and UK pigmeat more challenging to export to Europe. Furthermore, Ashworth explained, the currency difficulties have made European pigmeat more competitive on the international markets and sales by EU processors are ahead of the levels earlier this year.

Ashworth said: “With the UK perhaps looking less attractive, despite currency movements, the volume of imports of pig meat into the UK trailed last year’s levels through May, and the volume of pigmeat available on the UK market was slightly lower than last year.  So with a relatively tightly supplied market UK producer prices have begun to benefit.”

Ashworth also explained that although an improvement in producer prices is welcome, the rapid increase in feed prices is a concern for pig and poultry producers. He said: “Compared with 12 months ago, feed wheat and barley are some 25% more expensive, while soya bean meal is almost 40% more expensive. Although the feed grain price may ease a little as the UK harvest gathers momentum, latest futures prices suggest they will continue to trade more than 25% higher than last year.

“Set against these changes in feed costs, the recent improvement in pig prices pale into insignificance and result in reduced margins that even improved technical performance can do little to mitigate.”

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