February 27, 2014
UK finished pig prices up 5-6% on-year
Despite the seasonal dip normally experienced early in the New Year, finished pig prices have remained 5-6% up on-year, according to Quality Meat Scotland (QMS).
QMS reported in its latest update that pig prices in Great Britain (GB) fell from £1.69 (US$2.82) per kilogramme deadweight (dwt), at the start of 2014, to £1.645 (US$2.74) per kilogramme dwt by the second week in February.
However Iain Macdonald, economics analyst at QMS, said it was likely that more than just factors affecting seasonal demand were at play, with price fluctuations in the EU and currency movements also influences.
Macdonald said that with UK pig meat production amounting to only around 60% of domestic consumption - before even factoring in the 25% of UK pig meat which is exported - imports are needed to cover the remaining domestic requirement.
This results in approximately 55% of the total available supply coming in from overseas. Since the UK market is highly open to trade, it is clear that trade flows can have a significant impact on domestic producer prices. Unfortunately for the Scottish producer, in recent months most of these pressures from overseas have been negative for the price they receive, Macdonald added.
According to Macdonald, the average EU producer price for a grade E pig has fallen sharply, since the increases seen last summer, falling from around £1.67 (US$2.80) per kilogramme dwt, on average, at the end of August, to £1.34 (US$2.23) per kilogramme dwt in early February.
Price movement in the UK has been more modest, he added, with the UK premium between 18-22% more than the EU average. "Back in the final week of August the EU average was 2% higher than the UK average," he said.
Looking ahead to factors affecting price in 2014, the discovery of African Swine Fever in two wild boars in Lithuania, earlier this year, is likely to have had a significant downwards demand impact on the EU pig meat market in recent weeks, said Macdonald, with the Russian market account for around a quarter of EU exports in 2013.
