September 25, 2012

                                                                                         

BPEX Export Bulletin–September 2012 (Week 38)

 

 

This week's export news

 

Angola, the Dominican Republic and Cuba feature among the new markets explored by BPEX. This week, exporters visited Luanda and the first samples of English pork were shipped to Santo Domingo. Enthusiasm must be tempered by the reality of low prices in Africa and the Caribbean at this moment of time due to a glut of Brazilian pork and the strong market presence of US pork in the Caribbean.

 

 

Brazil

 

Prices rebounding

 

With shrinking supplies, prices are up 28% on 2011, giving some breathing space to Brazilian producers. Exports to Russia and the Ukraine in August were sharply up with the country exporting three times more pork to Russia than in August 2011. (Source: Mercolleida, various)

 

Parana producers to cut production

 

The number of sows in the State could drop from 270,000 to 250,000 as producers adjust to higher corn and soy prices. Production is unlikely to be cut further due to the low price of sows, typically fetching £150. (Source: Brazilian Meat Monitor)

 

 

Canada

 

Puratone in receivership

 

Puratone, the fourth largest Canadian hog producers followed Big Sky Farm into receivership this week. In their statement, they quote the sharp rise if the C$, the rise of feed prices due to the competition with ethanol production, the COOL country of origin regulations in the USA and the effect of the recent drought. The company total losses amount to C$93 million. It owns 28,000 sows and markets 500,000 pigs per year. Finding new investors to carry on production is likely to be tricky. Analysts blame poor productivity at Puratone. (Source: The Pig Site)

 

 

Dominican Republic

 

Crisis talks

 

The Dominican Pork Producers' Association (FEDOPORC) have asked for an urgent meeting with the President of the Republic to discuss producers' mounting losses due to high feed prices and rising energy prices. (Source: polisociales.com)

 

This is not salami

 

A scandal has engulfed the country as two salami producers have been found to use chicken MRM rather than pork and beef in salami. This seems to have gone on for fourteen years. (Source: Dominican Today)

 

 

Denmark

 

Market

 

The positive trend on the European markets is expected to continue. The markets for front parts, legs and loins remain strong. The season for collars is going to finish, but the price level remains fairly high and prices are expected to remain stable. The bacon market in the UK remains unchanged compared to last week. Exports to third countries remain unchanged with fine exports to Russia, China and Japan. (Sources: Danish Crown, Tican, Danish Food Council).

 

EU threatens Russia due to import ban

 

Just a month after it joined the WTO, Russia has already fallen foul of WTO rules. EU Trade Commissioner, Karel De Gucht has warned Russia that its ban on imports of live animals is contrary to WTO principles. The Russian ban includes EU exports of live pigs because of an "unacceptably high risk of infection" with regard to the Schmallenberg virus that affected the EU earlier this year. However, as the disease does not affect pigs the EU regards the ban on imports of live animals as a clear example of a technical barrier to trade. The Commissioner warns in a thinly veiled threat that the infringement of the rules can have more direct consequences. Almost 10% of the EU's agricultural exports go to Russia. (Source: Landbrugsavisen)

 

Decrease in consumption of antibiotics

 

According to new figures from DTU Food Institute, the consumption of antibiotics in Danish pig production decreased by as much as 30% in 2011. Consumption is now down to the same level as in 2001-2002. (Source: Landbrugsavisen)

 

Danish Slaughterhouses - payments week commencing 17 September 2012
Slaughterhouse	Danish Crown	Tican
Slaughter pigs (70.0 - 86.9 kg)	Euro 1.654	Euro 1.654
Difference to last week	0.027	0.027
Sows (Above 129.9 kg)	Euro 1.238	Euro 1.238
Difference to last week	0.027	0.027
Sows (Above 129.9 kg)	Euro 1.068	Euro 1.068
Difference to last week	0.027	0.027

      

   

France

 

Fragile industry

 

During July and August, pig price rose by 22.3 cents in France, 30 cents in Germany and 27 cents in Netherlands, in Spain pig prices did not decrease as they usually do at this time of the year but on the contrary, they increased by 9.5 cents. Within nine weeks, prices in main places in Europe increased by 7 to 19% to reach record levels since the euro. Although the income of French pig producers was stable until now, the first increase of feed added to high prices of piglets and to heavy investments to satisfy new animal welfare requirements, will not encourage them to produce. The uncertainty of the evolution of prices of feed and carcasses is not a positive signal either. The fragility of the future of producers is similar but increasing in the processing sector and today the SNCP is anticipating a 10 to 15% loss of activity for some large processors in August. Should this trend be confirmed, some dry charcuterie processors could be in serious danger. A price increase of 10 to 15 cents is necessary at primal cuts level but the real challenge is for processors to pass on this increase to French retailers.

 

Pigs

 

No big change is expected in this end of month for the French Market. The seasonal slowing down of the demand should incite abattoirs to remain very careful about their purchases. The rumours about a rise in German prices will have to be watched carefully because they can influence the French basic price.

 

Cuts

 

No change is to be indicated. Consumption is very calm, unsurprisingly for the period. However, offers are moderate which allows the slaughtering for cuts to maintain their sale prices, and this in spite of the need to straighten their margins.

         

Pork prices Rungis - Week commencing 17 September 2012
Cut name	Price range (Euro/Kg)
Back fat, rind-on	0,85
Trimmings	1,81
Leg	2,54
Loin including chump	3,28
Loin excluding chump	2,88
Belly extra without trimmings	2,98

       

   

Germany

 

Market

 

It is noticeable on the Hamburg market that supply of pigs for slaughter is increasing slightly. At the same time, demand remains unchanged from last week and prices for most cuts have reduced slightly as production has been reduced slightly in order to avoid having to sell under pressure. Bellies, shoulders and fat products however are sold at unchanged prices. Sow meat is marketed well with good demand leading to somewhat increased prices. (Source: AMI)

 

French application to QS

 

Inaporc is applying for membership of the German QS scheme. France would like to increase its market share Outre-Rhin despite fierce Belgian, Dutch, Danish and Spanish competition. (Source: Porc Magazine)

 

Danish pigs

 

11% of Germany's 60 million finishers originate from Denmark. On an annual basis Denmark sends more than seven million pigs to Germany, out of which the vast majority is piglets. Total imports of piglets and finishers to Germany have been increasing for years, but now seem to stabilise at approximately 15 million heads. However, imports of piglets are still increasing, but exports of finishers to Germany are decreasing because the price difference between Denmark and Germany has been declining. (Source: Markedsnyt for Svinekoed)

 

Family issues

 

The Tönnies family is now making their family issues public by publishing open letters and using the media as a platform for communication. According to Agrarzeitung, the family argument has been going on since February when Robert Tönnies, son of the late company founder Bernd Tönnies claimed back 5% of the company shares that he had previously given to his uncle, Clemens in 2008. According to German law, a gift can be claimed back if the receiver shows 'significant ingratitude'. According to Robert Tönnies, this is given in his uncle's case who refuses to integrate profits into the company that were made through private investments such as the purchase of shares in competitors businesses such as the 'Zur Mühlen' group. Clemens and Robert Tönnies hold 50% of the shares each and with the claim Robert now aims for the majority of the shares. (Source: topagrar)

 

Pork prices Hamburg Market Week commencing 17 September 2012
Cut name	Price range (Euro/Kg)
Round cut leg	2,40/2,60
Leg (boneless, rindless max fat level 3mm	3,30/3,45
Boneless Shoulder	2,85/2,95
Picnic Shoulder	2,30/2,50
Collar	2,75/2,90
Belly (bone in, ex-breast)	2,65/2,75
Sheet Boned Belly (rindless)	2,30/2,50
Jowl	1,65/1,80
Half Pig Carcasses U class.	2,30/2,40

  

 

 

Latvia

 

Industry faces collapse

 

The pig sector has asked for urgent government help as producers face heavy losses and a possible collapse of the entire sector, all due to high feed prices. (Source: All about Feed)

 

 

Netherlands

 

Producers up in arms

 

Albert Heijn had to backtrack on its decision to cut 2% of all its purchasing prices including meat after a general outcry. Jumbo did cut its suppliers' prices by 1.2% earlier this year. (Source: Boerderij Vandaag)

 

 

Russia

 

Cherkizovo doing well

 

The sales volume in the pork division in the first half of 2012, increased by 14 % to 46,764 tonnes of live weight, compared to 41,070 tonnes in the first half of 2011. In dollar terms, prices for pork sales decreased by 2% from $2.70 per kg of live weight in the first half of 2011 to $2.65 per kg of live weight in the first half of 2012 (excluding VAT), due to RUR weakening. Compared to the first quarter of 2012, the price in the second quarter was almost flat. Prices in RUR terms increased by 5% from RUR 77.41/kg in the first half of 2011 to RUR 81.32/kg in the first half of 2012 (excluding VAT). Compared to the price in the first quarter of 2012 of RUR 80.53/kg, the price in the second quarter increased by 2% to RUR 82.06/kg. Cherkizovo Group recently announced the acquisition of a set of agricultural assets of Voronezhmyasoprom. Assets acquired include a swine nucleus unit in Voronezh region. These assets will further strengthen Cherkizovo's leading positions in the Russian meat market, ensuring biological security in pork production, more efficient cost management and an enhanced level of vertical integration within the Company. The swine nucleus unit is located in the Voronezh region. The unit houses Duroc, Yorkshire and Landrace breeds and will produce purebred gilts and boars. The facilities include a boar stud, a breeding facility for 2,400 sows, a nursery facility for 10,000 pigs and a finishing facility for 6,700 pigs.  (Source: http://www.cherkizovo-group.ru)

 

 

Spain

    

  

Sweden

 

Rapeseed pork in stores

 

Swedish meat company Scan now launches a rapeseed pork range in stores, after having introduced it in commercial kitchens and restaurants during spring this year. The range includes a total of 16 products. The meat is supposedly healthier than conventional meat and contains 68% polyunsaturated fat. According to experts, the meat is tender, soft and easy to work with and keeps the juice well. Scan claims that this to be the biggest innovation in this area for almost 30 years. The rapeseed pork has been developed in Finland over five years of research. In Finland, according to Scan, rapeseed pigs represent approximately 50% of the pig production. The meat is sold at somewhat higher prices, and farmers receive a bonus for using a feed mix from Svenska Feed. (Source: Landbrugsavisen)

 

 

Ukraine

 

Industrial farms share goes up

 

The number of pigs produced on large pig complexes versus backyard farmers in Ukraine grew from 33% up to 44% over the past 6 years. The large pig complexes are basically following the scenario once shown by Ukrainian poultry industry where domestic poultry production made imports of poultry meat non-feasible and backyard poultry farming non-competitive. (Source: www.PigUA.info)

 

 

USA

 

Contrasting outcomes

 

For the week ending 07 September, producers lost an average US$29 per head according to Profit Tracker. Although feed prices are slightly down slaughter pig prices are also down. In contrast, processing margins are reported up at US$17. Processors are building frozen stocks of pork in order to take advantage of the low prices says a USDA report. (Source: PorkNetwork, Mercolleida, Reuters)

 

Prices still under pressure

 

Pig farmers are rushing animals to slaughter to cut losses keeping prices under pressure. The hog slaughter a week ago was the highest in 4-1/2 years. (Source: Reuters)

 

 

US$1 = EUR0.77 (Sep 25, 2012)