Too many pigs, too-low prices – FWi REVIEW OF 1997

FACE=HELVETICA,ARIAL SIZE=”-1″>December, 1997

Compiled by FWi staff

Pig prices remained below last years
levels for the whole of 1997 – largely because of the strength of
Sterling. But UK producers were able to take advantage of swine fever
outbreaks on the Continent and export some surplus pigmeat for much of
the year. Unfortunately, the UK market remains over-supplied and pig
farmers this Christmas face their lowest seasonal prices ever in real
terms.

JANUARY

• Pig farmers should
  closely watch currency movements in the year ahead, warns Mick Sloyan of
  the Meat and Livestock Commission. Pig values in Denmark are the same as
  last year but, when expressed in Sterling, those same prices are 14%
  cheaper because of the Pounds strength. This and the expected 2.2% rise
  in slaughterings to 14.2 million will mean a lean 1997 for pig farmers,
  Mr Sloyan says.

FEBRUARY

• Despite the
  strength of Sterling, pork exports rise in the wake of swine fever
  outbreaks on the Continent. Sales to the rest of the EU are up by
  one-fifth on a year ago during the week ending 15 February, according to
  MLC statistics. The average all-weight spot price is about 84p/kg.

MARCH

• Over a million pigs
  face being culled in Holland, following the outbreak of swine fever. UK
  spot prices reach 84p/kg.

APRIL

• The average auction
  price of pigs shoots up again, rising 16p/kg to 110.84p/kg. Following
  the swine fever outbreak on the Continent, Japan is reportedly looking
  elsewhere for supplies.

• Pork exports rose to record levels
  during 1996, gaining market share both inside and outside the EU,
  according to the MLC. But the looming deadline for removing sow stalls
  in the UK is a major challenge for the industry, says pigmeat strategy
  manager Colin Baldwin.

MAY

• Pig industry opinion is
  split as to where prices are heading. The MLC suggests that any fall in
  the coming months is unlikely. But other sectors of the industry say
  consumer demand has decreased and prices have peaked.

JUNE

• Expansion of the UK pig herd pushes prices down. Clean
  slaughterings during the first six months of the year are were up almost
  10% on the first half of 1996.

JULY

• The all-pigs
  average spot price stands at 82.5p/kg liveweight. A year ago, it was
  more than 106p/kg. Although supplies are tight on the Continent, the
  strong Pound makes the UK a favourite destination for EU exporters.
  

AUGUST

• UK pig prices tumble,
  despite the effects of disease on the Dutch industry. Spot values fall
  to less than 67p/kg liveweight. The strong Pound continues to work
  against British exporters, reports the MLC. Imports are being sucked in,
  upsetting the fine balance between supply and demand, says Graham
  England, NFU pig committee chairman.

SEPTEMBER

• The UK
  market continues to be heavily supplied, with many pigs going for
  slaughter, according to the MLC. Slaughter numbers are up 6-8% on the
  year and demand is estimated to be down by about 25%.

OCTOBER

• A boom in pigmeat supplies from abroad and the increasing
  strength of Sterling combine to create a seemingly bleak picture for
  producers. Reports of imported Dutch pigmeat being sold as “Charter
  Quality British Bacon” do little to boost morale in an already depressed
  sector.

• In the short term, pigmeat supplies will remain high,
  says MLC head of pigmeat strategy, Mick Sloyan. But demand is expected
  to pick up slightly during the Christmas run-up, he adds.

NOVEMBER

• Current returns for all but the most efficient producers
  are well below the break-even levels of 110p/kg deadweight and
  £32/hd for weaner breeders.

• The sharp fall in prices is
  attributed to an influx of Dutch heavy hogs entering the slaughter
  chain. Dutch producers have held back until now to enable their pigs to
  reach their Government-financed minimum carcass weight level.

DECEMBER

• THE European-wide
  decline in pig prices shows some signs of levelling out. Reports from
  live auction centres across the UK show most prices range from 58-65p/kg
  – within 2-4p/k of producer values.

• But in real terms, the
  industry is looking at its worst seasonal prices ever. Seasonal returns
  to producers remain at their lowest level for 17 years, before adjusting
  for the value of Sterling.