UK pig prices are forecast to rise as supplies contract due to the reduction in the size of the national herd.
According to BPEX, EU mainland pigmeat production is also forecast to fall by 3% during 2013, due to high feed prices and the effects of the EU-wide partial stall and tether ban, but retail sales also need to improve before any significant price recovery occurs.
However, the results of the recently released DEFRA December 2012 Pig Census make grim reading, with just over 4.2 million pigs in the national herd, which has been in decline since 1999 following the introduction of the unilateral UK stalls ban.
The Scottish breeding herd has been hit the hardest, dropping by almost 13%, and although gilt placings throughout the UK have risen, producers are continuing to make heavy losses due to high feed costs. As a result, further falls in the national herd are anticipated when the June 2013 Census results are published. A near-50% reduction in the size of the national pig herd has occurred since the late 1990s.
Imports and exports
Although the Deadweight Adjusted Pig Price (DAPP) has risen from 155.46p in early March and now stands at 158.83p, this is still 1.7% lower than its value at the start of the year.
But feed costs have eased marginally since early January and feed wheat is currently trading at £196.50/t ex farm, compared with £200/t in early January.
Another positive factor in the marketplace is that average European mainland producer prices have risen by an estimated 5% since January and now stand at the equivalent of 140p/kg for a heavier carcass, with lower slaughter and grade deductions than in the UK.
The value of the euro remains a key factor in determining the cost of pigmeat imports from mainland Europe, as well as UK cull sow and pigmeat exports. Despite the recent Cypriot Eurozone financial crisis, the euro has risen from 81.3p at the start of the year and is currently trading at 85.4p.
Pig producers should look at every available opportunity to buy compound feed and cereals on a forward basis to allow them to maximise their pricing strategies at a time when only 75% of the planned UK winter wheat acreage has been drilled. Up to 10% of this is of questionable viability and feed prices will inevitably remain under pressure.