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Tightening of EU supplies boosts UK pig price prospects

23rd Sep 2016 / By Alistair Driver

The prospect of improved UK prices being sustained over the coming months have been boosted by new figures showing a decline in the EU pig herd.

carcasesUK pig prices have risen again with the EU-spec SPP up 0.49p to 140.38p/kg in the week ending September 17.

This is the first time the SPP has gone beyond 140p/kg since January 2015, with the current price now standing at 10p more than this time last year.

AHDB attributed the continuing price rise to two main drivers. Sterling has remained weak against the euro and dollar, helping exports and the European price has started to rise slowly again, following a brief period of stagnation.

Estimated UK slaughterings were back down by 2 per cent on the previous week and 8 per cent on last year to 167,000 head, supporting evidence of a tightening of supplies in the market.

EU pig herd decline

Looking further forward, provisional figures from Eurostat for the year to June 2016 suggest supplies at an EU level are likely to continue tightening.

Declines of 2% were recorded in the total EU pig herd, while the breeding herd was down 4%, as the weak pig market in 2015 took its toll on European pig producers. Declines in breeding sow numbers and total pig herds were recorded among the majority of member states.

The decline in the total pig herd was predominantly driven by falls in the German and Danish herds, of 3 per cent each.

Only a handful of Member States recorded rises in their total pig herds, most notably Spain at 2%, securing its place as the largest pig herd in Europe, with 400,000 more pigs than Germany.

Spain also retains the largest breeding herd in Europe, although this was down 1% on the previous year.

Germany and the Netherlands also posted declines in their breeding herds, of 5% and 3% respectively.

The Polish breeding herd was down 16%, and its overall herd 12%, on the back of declining prices and continued outbreaks of ASF. There have been reports that a cull of 600,000 pigs maybe in the pipeline to try to combat ASF, but these remain to be substantiated, according to AHDB Pork.

Only two Member States posted increases in their breeding herd - Sweden and Ireland.

AHDB Pork said: “The decline in the breeding herd suggests that slaughterings should slow in the second half of the year and into next, and a tightening of supplies may be expected. There has also been a decline in the number of in-pig sows and in-pig gilts.”

“This contraction of the finishing herd will result in fewer pigs coming forward in the short and medium term. The decrease in the total herd should continue to support prices going forwards.”

Strong export demand

While domestic demand remains subdued, as does intra-EU trade, exports to third countries, particularly China, remain strong.

Coupled with a further tightening of supplies, the EU pig price is expected to continue to increase, following the strong surge since May of this year.

AHDB Pork concluded: “This should come as welcome news to UK producers, as a strong European price will provide further support to the domestic price.

“Combined with this, if the value of sterling remains weak against the euro as Brexit negotiations play out, this will further support the competitiveness of UK pork in the export arena, while increasing the price of EU imports to the UK. This would increase the attractiveness of UK pork on the domestic market.”