GB sees finished pig prices up year on year

Finished pig prices have remained 5-6% up year on year, according to Quality Meat Scotland (QMS), despite the seasonal dip normally experienced early in the new year.

In its latest update, QMS reported that pig prices in Great Britain fell from 169p/kg deadweight (dwt), at the start of 2014, to 164.5p/kg dwt by the second week in February.

However Iain Macdonald, economics analyst at QMS, said it was likely that more than just factors affecting seasonal demand were at play, with price fluctuations in the EU and currency movements also influences.

Macdonald said: “With UK pigmeat production amounting to only around 60% of domestic consumption – before even factoring in the 25% of UK pigmeat which is exported – imports are needed to cover the remaining domestic requirement.
“This results in approximately 55% of the total available supply coming in from overseas. Since the UK market is highly open to trade, it is clear that trade flows can have a significant impact on domestic producer prices. Unfortunately for the Scottish producer, in recent months most of these pressures from overseas have been negative for the price they receive.”

According to Macdonald, the average EU producer price for a grade E pig has fallen sharply, since the increases seen last summer, falling from around £1.67/kg dwt, on average, at the end of August, to £1.34/kg dwt in early February.

Price movement in the UK has been more modest, he added, with the UK premium between 18-22% more than the EU average. “Back in the final week of August the EU average was 2% higher than the UK average,” he said.

“Currency movements have played a part too, with sterling strengthening by 3-4% against the euro since the summer of 2013. The implication of the significant price differential is that UK pigmeat looks expensive to buyers in both the UK and on the continent.”  

Looking ahead to factors affecting price in 2014, the discovery of African Swine Fever in two wild boars in Lithuania, earlier this year, is likely to have had a significant downwards demand impact on the EU pigmeat market in recent weeks, said Macdonald, with the Russian market account for around a quarter of EU exports in 2013.  

“While UK prices may have eased back in recent weeks, they remain 5-6% above year earlier levels despite UK production being at its highest level for 12 years, indicating a real strength in the market,” he added.  

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