EU pork prices to remain high until 2014
EU pork prices are expected to remain high into 2014 due to a shrinking EU sow herd, higher piglet prices, the implementation of the EU sow stall ban and strong export demand, Rabobank has said.
EU pork prices have reached a high of €1.90/kg carcass weigh equivalent (CWE) – just shy of the record high of €1.94/kg (CWE) in March 2001 following the BSE and foot-and-mouth disease outbreaks.
The January-September 2012 EU pork price averaged €1.67/kg (cwe) – €0.17/kg above the same period in 2011 and €0.20/kg above the 2004-2011 average. Rabobank say this is a reflection of a tight EU supply situation, which came about following the decline of 2.5m sows (15.6% of the EU herd) between 2006 and 2011.
In May 2012 the EU sow herd declined by 3.9% (based on figures from about 85% of the total EU sow herd). This was due to low profitability as a result of high feed costs and investment required to comply with the EU sow stall ban.
EU piglet prices from January to September were 25% higher than the same period last year – despite this, many smaller producers of piglets are expected to cease production, due again to the investment needed to comply with the EU sow stall ban.
Further decline of the EU sow herd is expected in the coming months as producers put expansion plans on hold due to the current high feed costs.
EU supply will also be affected by continued strong export demand for EU pork due to projected lower global production and the lower value of the euro against the US dollar.
Global pork production is under pressure due to low profitability and high feed costs. As a result, China – the leading pork producer with a 49% share of global production – has starting culling its national sow herd.
Download a poster in support of the UK pig industry here