Prime pig prices follow seasonal trend
Farmgate prime pig prices are following their traditional seasonal decline, with producer prices dipping slightly since the start of the year, according to the latest market analysis by Quality Meat Scotland (QMS).
According to Stuart Ashworth, QMS director of economic services, compared to a year ago GB prices are 6% lower.
“The largest cost faced by pig producers is the price of feed, said Ashworth. “With cereal and protein prices running higher than last year through late 2018 and into 2019, financial margins for prime pig producers will have come under pressure.”
Contributing to the weakness of farmgate prices has been an increase in pigmeat production. In recent weeks, around 1% more pigs have been slaughtered than last year and their carcase weights are just over 1kg heavier.
In contrast, the wider European average price has also drifted lower in the past month.
However, the price still stands around 1% higher than last year with major producers like Denmark, Germany, Spain and France are all currently benefiting from prices higher than a year ago.
“UK producer prices are well above the EU average, making the UK an attractive tariff-free destination for many European producers, said Ashworth.
Like many others, however, pig producers in the UK and Europe will be nervous of what sort of Brexit materialises and whether the UK adopts tariffs on pigmeat imports or not.
Other major pigmeat producers are, however, seeing farmgate prices under pressure.
The United States is currently reporting prices 25% lower than a year ago, while Brazilian producer prices are 10-15% lower than a year ago.
Both the United States and Brazil have been impacted by trade disputes or health-based restrictions, the US with China and Brazil with Russia, which have restricted their export opportunities.
Even China is seeing prices down around 10% on the year, despite production being affected by measures to control African Swine Fever (ASF) and the trade dispute with the US, which has reduced imports from this source.
UK and EU exports to China have also slowed in late 2018, although China has been buying more Brazilian product.
The presence of ASF in China is expected to reduce Chinese production during 2019 and increase demand for imported pigmeat helping to stabilise global prices.
“In the current climate, UK pigmeat exports will be affected by how EU and non-EU countries react to the UK leaving the EU and the status of approvals to export,” said Ashworth,
“Similarly, European exports to non-EU countries may be affected by restrictions imposed on member states affected by ASF.”