Pigmeat market faces another challenging year

The AHDB’s annual outlook shows there is another difficult year ahead for pigmeat.

Market conditions in 2016 are similar to those of 2015, when rising supply and subdued demand kept UK, EU and global pig prices low.

In addition, currency, political and disease risks make the market more uncertain than many others. The extent to which producers reduce sow numbers or quit the sector will be an important local factor, with some large-scale breeders already having signalled reductions or closures.

See also: Poor pig prices force closure of farms

• Further growth forecast in UK supplies, keeping prices under pressure unless demand picks up
• Stable UK breeding herd (so far) means improved productivity, including higher carcass weights, will be the main driver of slaughterings in 2016, although growth forecast slower than in 2015
• UK imports are expected to grow again slowly – exchange rate may also enable stronger growth in UK exports in 2016
• Faster rise in EU weaner prices than in EU finished pig prices could spell tightening supplies ahead
• EU breeding herd will start to decline in June, but bigger fall likely by December – possibility of second half-year price recovery
• The UK price premium over continental EU pigmeat prices has narrowed, but is still historically high
• Supply growth also expected in other major exporting countries, although not as much as in 2015
• Demand from key importers not likely to be as strong as in 2015 and a further fall in Russian import requirements could keep global prices under pressure
• Possibility of EU-led price recovery later in the year, but pace and scale uncertain
• Economic, political and disease risks could all alter outlook.