Pigmeat prices struggle to match those seen in 2020
Global farmgate prices for pigmeat have performed strongly over the first quarter of 2021.
Although despite the recent increase, UK and European prices continue to struggle to match last year’s levels, according to the latest market commentary by Quality Meat Scotland (QMS).
Stuart Ashworth, director of economic services for QMS, said that farmgate prices for the EU and UK remain 13% and 17% lower than a year ago.
“Average prices in the EU for example, have increased by over 12% since the beginning of February.
“In the USA and Canada, farmgate prices climbed some 35% over the same period.
Recovery in farmgate prices in Great Britain is a more modest 2%, although they remain higher than the EU average. Despite [the] recent increase, European and UK farmgate prices remain 13% and 17% lower than a year ago.
“Equally though, historic price trends would suggest modest seasonal increases in farmgate pig prices through the first half of the calendar year.”
Rise in pigmeat prices
Ashworth said that while the recent rises in prices are welcome, pig producers are also seeing growth in feed prices; an input that accounts for over three-quarters of the cost of producing pigmeat.
“With cereals and oilseed meal prices some 15-20% higher than twelve months ago, the fact that farmgate prices are lower than this time last year clearly indicates lower margins for pigmeat producers in Scotland,” explained Ashworth.
Strong European and North American prices are being helped by continued firm demand from China, with international trade heavily influenced by the presence of African Swine Fever (ASF) in some international pig herds.
It has been well documented that the impact of ASF in China has inflated their imports of pigmeat. It had been thought that China had ASF under control but recent reports from China indicate that ASF is still circulating and there has been some regional increases in incidence.
“As a consequence, China is expected to continue as a major player in international pigmeat trade throughout 2021,” said Ashworth.
Increase in Chinese pig meat exports
As a result of this, the EU reported an increase in exports to China during 2020 of 45%, although growth was recorded at 16% during January 2021.
This growth has been achieved despite several EU member states, including Germany, having cases of ASF preventing exports to China.
UK trade data indicates that the UK has also benefited from increased trade with China in 2020 but were less successful during January 2021.
The reasons for this decline in UK trade with China are complex but include China’s removal of export approval from some processing sites including a major site in Scotland, because of concerns over the presence of Covid-19 among the staff of these sites.
“Not only do these Covid-19 implications reduce market opportunities internationally for these sites, they have also led to limited slaughter capacity resulting in pigs being held back on farms, leading to these pigs falling out of premium specifications and suffering price penalties,” concluded Ashworth.