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Pig price continues to rise as UK-EU gap widens

8th Dec 2016 / By Alistair Driver

The UK pig price continues to rise, despite a slight strenghthening of the pound and falling EU pig prices.  

carcasesFor the week ended December 3, the EU-spec SPP rose by a further 0.65p to reach 151.39p/kg, the 35th consecutive weekly increase.

This price now stands at almost 26p above the equivalent figure a year earlier figure and is almost 7p beyond the 2014 level. 

The strengthening in the pound appears to have contributed to a slower rate of increase over the past four weeks. Nonetheless, tight supplies and healthy export demand has enabled modest weekly price rises to continue, according to AHDB Pork.

Meanwhile EU prices, continue to slide in the other direction. For much of this year, the UK price has dragged behind the EU price. But since the end of September, the EU Reference price has slipped from over 144p/kg to under 130p/kg at the end of November.

Even allowing for the differences in the way EU and UK prices are calculated, this puts the UK at around 15-16p/kg above the average EU price. The contrast is even more evident in the Netherlands, where the average price is down to 116p/kg and Denmark, Spain and France (all just above 120p/kg).

AHDB has predicted the falling EU price combined with the rising pound could see the UK price finally levelling off towards Christmas. 

Ahead of Christmas, estimated slaughterings were up 4 per cent on the previous week at 189,00 head, although throughput remained 4 per cent below year earlier levels, reflecting the reduction in available supplies this year. 

EU production forecast

EU pig meat production is expected to show only marginal growth in the coming decade, according to the latest EU Commission Medium-term Outlook report.

Annual output is projected to grow by just 0.1 per cent per year, on average, taking 2026 pig meat production to 28.9 million tonnes.

Subdued domestic pig meat demand is expected to limit expansion. This year, increasing exports are estimated to have driven a 0.6kg drop in per capita pig meat consumption in the EU, down to 31.9kg/person.

Over the next 10 years, this figure is expected to decline slightly further as consumers from core EU countries (EU-15) increasingly switch to poultry meat, according to AHDB Pork trainee analyst Bethan Wilkins.

Environmental concerns, leading to increasing legislation on manure management, are also anticipated to limit further increases in pork production.

With EU demand remaining limited, exports are therefore expected to become an increasingly important component of the European pig meat market over the next decade.

In 2016, Chinese demand has been key to driving EU pork exports to a record 2.7 million tonnes (carcase weight equivalent). This demand is expected to remain high in subsequent years but below current levels.

Alternative Asian markets such as Japan, South Korea and the Philippines will be key to this growth, Ms Wilkins said.