Several factors could help support finished pig prices in 2012, maintaining recent market improvements, says Andersons consultant Greg Ricketts.
“The export market could provide a boost as the partial stalls ban comes into effect in the EU in 2013. Many Continental producers are struggling to comply due to low profitability and restricted bank lending and many are expected to reduce production or exit altogether before 2013.”
Forecasts for EU pig slaughterings show a fall of 1.3% in the second quarter of 2012, on a predicted drop in sow numbers. This could mean a reduction of 2.1m tonnes of pig meat on the EU market.
China’s agreement to accept UK exports could be worth as much as £40m a year and BPEX has increased its promotion ahead of the 2012 Olympic Games. “Domestically, demand should be reasonably strong as consumers turn from more expensive meats such as beef and lamb to pork.”
Prices have begun to show signs of improvement. Since its peak in July of 152.9p/kg the DAPP fell by 8.4p in three months. It has since risen marginally due to better spot demand. While the supply of clean pigs is above year-ago levels, as Christmas approaches demand from processors is increasing.
However, weaner prices fell during the autumn as the prospects for market improvements receded, down 11% on the year.
“Feed prices are likely to remain a big issue. Although cereals prices have weakened this may not quickly translate into lower costs of production. Many feed companies will have made forward purchases and the prices of non-cereals products in rations have generally not fallen greatly.”
• Partial stall ban should boost export demand
• EU slaughterings predicted to fall
• China’s demand rising
* Commentary for this article is based on Andersons’ Outlook 2012. Copies can be obtained free of charge by calling 01664 503200 or it can be downloaded from the Andersons website – see ‘Publications’.
* The Andersons Centre will be running its popular series of spring seminars on the prospects for UK agriculture in more depth at locations around the UK in spring 2012. These briefings are aimed at farm business managers as well as professionals working with companies in the agricultural sector. Detailed overviews of each of the main sectors of UK agriculture will be covered as well as comprehensive discussion of the latest agricultural policy developments. For details go to the Andersons Centre.