October 9, 2012

                                                                                            

BPEX Export Bulletin - October 2012 (Week 40)

 

 

This week's export news

 

UK exports to end of July showed a static position at +0.5%. For the first time, direct exports to China (1,042 tonnes) have overtaken exports to Hong Kong (952 tonnes) in July. The current clearance problems in Hong Kong are still evident with a net loss of around 1,000 tonnes of exports for the same month.

 

BPEX will be present at CIMIE (China International Meat Industry Exhibition) in Beijing next week with key processors present on the stand.

 

The news went unnoticed during the Olympics but Paul Walsh, the CEO of Diageo has been appointed "Britain Food Ambassador".

 

A presentation on Chinese food service has been posted on the Internet site, www.eblex-bpex-export.org.uk. The Internet site, www.tasteofbritain.cn now carries a joint BPEX - EBLEX page in Chinese.

 

 

ASIA

 

Fast growth of food service in the Far East

 

Some key numbers:

• There are now 25,000 Western-style restaurants in the region with Italian restaurants in Japan the most numerous.
     
• Fast growth of coffee shops chains, some upmarket like TCC in Singapore, bakery chains and fast food chains.
    
• Sky, Sats and Cathay Pacific produce nearly 250,000 flight meals every day between them.
   
• China food service market was worth £130 billion. in 2011. It grew by 16.9% that year and will grow again by 16% this year. However, the value of the market trails Japan's whose food service market is worth £210 billion. The Korean market is worth around £100 billion. (Source: UKFDEA)

   

Brazil

 

Producers welcome tax breaks

 

With record high production costs, the Brazilian Association of Pork Producers and Exporters (Abipecs) has welcomed the recent government help package, particularly the payroll tax relief. (Source: Reuters)

 

 

Bulgaria

 

Pork inflation

 

Price-savvy Bulgarian consumers were shocked by the rise of 20% of pork prices at retail last week, mainly due to the rise of price of imported German pork. Dobrin Papazov, chair of the Bulgarian Association of Swine Breeders, told the Bulgarian National Television that prices are expected to go up by a further 10% in the spring. (Source: Novinite)

 

 

Canada

 

Canadian pig producers in crisis

 

Farmers in Western Canada demand immediate government intervention to solve what is being described as the worst crisis ever for the Canadian pig production. Two of Canada's largest pig producers, Big Sky Farms and Puratone with a production of respectively one and a half million pigs a year, filed for bankruptcy in the last few weeks. The reason is the high feed costs as a result of drought in the US, and banks failing the industry at a time when pig producers urgently need help. To avoid further long-term damage to the sector, the farming organizations try to find ways to reduce the producers' financial problems, for example, through government supported temporary funding over the next six to nine months. Amounts in the order of €105 million are mentioned and the farmers' organisations stress the urgency. (Source: Landbrugsavisen)

  

   

China

 

Zhongpin profits down

 

Lower retail prices and higher wages led to a sharp fall of profits to £6 million despite turnover up 11.4% to £260 million in the second quarter.  The company expects Chinese pork prices in 2012 to be 15-20% down on 2011. (Source: Asian Pork)

 

 

Czech Republic

 

Growth to come?

 

Czech processors and retailers are looking to break Germany stronghold on the market as 50% of pork is now imported. Czech breeders are willing to increase production. However, lack of finance and qualified manpower are likely to dampen this ambition. (Source: various)

 

 

Denmark

 

Market

 

The European markets for fresh meat continue on their positive trend. The development for legs is positive with slightly increasing prices. Prices of front parts, shoulders and loins are stable with strong sales. The British market for bacon remains unchanged. Exports to third country markets in China, Japan and Russia remain strong. (Sources: Danish Crown, Tican, Danish Food Council)

 

New head of pig meat division

 

By the turn of the year, Danish Crown appoints the 43-year-old Jesper Friis as new director of the pig meat division of the Group. For some time, the position has been handled by Danish Crown's CEO Kjeld Johannesen besides his other daily obligations. The pig meat division with a turnover of approx. €4 billion is a cornerstone of the slaughterhouse group. Jesper Friis comes from a position as Senior Vice President of Carlsberg, where he was responsible for the region of Western Europe. (Source: Landbrugsavisen)

    

Low Danish pig quote

 

The Danish settling prices for pork are currently very low compared to the level in Germany. This week, a German farmer receives 9 cents more than a Danish pig producer. However, for the full year 2012, the difference is significantly smaller. Here, the Germans are just a touch ahead with 1.5 cents. For the Danish slaughterhouses, it is important to offer pig producers a price in line with the German in order to ensure adequate supplies. (Source: Landbrug og Fodevarer)

 

Danish Slaughterhouses - payments week commencing 01 October 2012
Slaughterhouse	Danish Crown	Tican
Slaughter pigs (70.0 – 86.9 kg)	Euro 1.654	Euro 1.654
Difference to last week	Unchanged	Unchanged
Sows (Above 129.9 kg)	Euro 1.265	Euro 1.265
Difference to last week	0.027	0.027
Sows (Above 129.9 kg)	Euro 1.095	Euro 1.095
Difference to last week	0.027	0.027

      

   

Dominican Republic

 

More salami woes

 

Following a public outcry regarding the quality of local salami (see bulletins passim), Haiti the main export outlet has closed its market due to low protein content and faecal contamination. (Source: Dominican Today)

  

  

France

 

Reduced activity

 

The charcuterie group, Gad is reducing slaughterings in two sites.The Lampaul site has capacity of 45 000 pigs and will reduce down to 19 000 per week and the Josselin site will also reduce its activity down to 21 000 when the capacity is 49 000. This reduction will cut 149 fixed-term contracts: 52 in Josselin and 97 in Malpaul-Guimiliau. Elivia, the meat (beef and pork) division of Terrena is also cutting 62 jobs in Villers Bocage.

 

Change of direction

 

Stalaven, the subsidiary of Euralis sees four of its main managers leaving the group. Internal disagreement with Pierre Couderc, the Managing Director is the main reason for this internal earthquake. Also, the Stalaven in Saint-Agathon will close as planned in November 2012.

 

Pigs

 

There is nothing new for the market, especially if, as on Monday, offers are higher than those over the last few weeks. The European context stays very firm, due to limited offers. The professionals in the meat sector stay prudent because of the high price levels and because they are waiting to see clearly what the orientation of the demand will be, in the EU and for export.

 

Cuts

 

Thanks to the beginning of the month, the French Market remains calm. Slaughtering for cuts has not affect prices; a higher pressure on prices is not to be excluded in the medium term. Certain observers think that prices will be lower in the European countries. According to the Spanish site "3 tres3", "offers are better at the beginning of October, the quotation has already reached its annual maximum and it seems that the fold will be slow and progressive, but inevitable."

    

Pork prices Rungis - Week commencing 01 October 2012
Cut name	Price range (Euro/Kg)
Back fat, rind-on	0,85
Trimmings	1,84
Leg	2,72
Loin including chump	3,30
Loin excluding chump	3,04
Belly extra without trimmings	2,90

     

 

Germany

 

Market

 

The bank holiday on 3rd October has led to lower profits on the wholesale markets this week and the upcoming holidays in the Northern part of the country add to this development.  Loins, shoulders and bellies could be sold at slightly higher prices but in general, all cuts are sold well.  The market for sow meat is also balanced with slaughter numbers remaining below average. (Source: AMI)

 

Co-operation restarted with convicted company

 

In its production in Germany, Danish Crown again uses East European workers employed by contractorm Ingolf Roschmann who some years ago was convicted of using illegal Romanian workers. In 2006, Danish Crown as a result of the criminal case, terminated all co-operation with the controversial job intermediary who received a million Euro fine and a suspended prison sentence in the case. At that time, he was associated with brothel operations, arson, imports of illegal workers and falsification of passports. In connection with Danish Crown's acquisition of the slaughterhouse D & S Fleisch in Essen two years ago, Roschmann reentered in co-operation with Danish Crown.  (Source: Politiken)

   

Pork prices Hamburg Market Week commencing 01 October 2012
Cut name	Price range (Euro/Kg)
Round cut leg	2,45/2,60
Leg (boneless, rindless max fat level 3mm	3,35/3,50
Boneless Shoulder	2,98/2,3,05
Picnic Shoulder	2,43/2,55
Collar	2,75/2,90
Belly (bone in, ex-breast)	2,70/2,80
Sheet Boned Belly (rindless)	2,55/2,75
Jowl	1,65/1,85
Half Pig Carcasses U class.	2,33/2,43

    

   

Korea

 

Prices down

 

Higher meat production has led to a sharp fall of prices including pork. Korean producers' associations are aiming to promote meat to stem the decline. (Source: Asian-agribiz)

 

 

Netherlands

 

Fewer pigs and pig farms

 

The total number of pig farms has fallen for the first time below 6,000, including 2,440 breeding farms. The number of Dutch pigs in down 1%. (Source: Boerderij Vandaag)

 

Return to "Agflation"

 

The latest Rabobank report states that food prices are due to hit record high and that meat shortage will hit markets in 2013. (Source: Boerderij Vandaag)

  

 

Philippines

 

Production inches up

 

In the first half of 2012, production rose by 1% to 934,000 tonnes. However, prices are down 9%. Producers keep blaming meat smuggling. Meanwhile, the government has pledged £3 million to build new abattoirs. (Source: Asian Pork)

 

Foremost farms go Dutch

 

The pig producer has signed an agreement with Hypor for the supply of Piétrain. The same producer will also source PIC stock. (Source: Asian Pork)

 

 

Portugal

 

Limited offer and high prices

 

The limited offer is keeping the Portuguese market under high pressure. Slaughter weights are said to be lower in order to maintain supplies. (Source: Mercolleida)

 

 

Russia

 

Pig imports to rebound

 

Pig production is expected to increase to 2.1 million tonnes in 2013 from 2.045 million tonnes in 2012 and two million tonnes in 2011, according to USDA. Growth is limited by the higher feed prices and the continuing African swine fever issue. Pig imports which have declined since 2010, when the import duty rose from 5 to 40%, are now stable at 780,000 heads and could rise higher. Pork imports in 2012 are expected to be 5.2% higher. (Source: Agra Europe)

 

Pig numbers increasing

 

As of September 1st, 2012, the population of pigs in Russia increased to 19.7 million heads. This represents a 5% increase compared to September 1st, 2011. The total weight of pigs (in live weight) manufactured in Russia was 1.25 million tonnes which is 12.2% more than the same date last year. The Central Federal region produces about 50% of the total volume of Russian pork. (Source: Segodnia newspaper)

 

Consequences of reduced import duties

 

After the Russian Federation joined the WTO, the import duty for pork within quota was decreased to 0% and import duty for pork exceeding quota was decreased from 75% to 65%. Import duty for live pigs decreased from 40% to 5% (but it should not be less than 0.5 euro per 1 kg). Vadim Varshavskiy, the Director General of Russian Agricultural Group, said that if it wasn't for WTO and decreasing import duties, domestic producers would be able to satisfy 95% of domestic need in pork in 10 years time. Now, after 6 years of implementation of the national program of development of pork production, which included an investment of RUR200 billion and the construction of pig farms, domestic producers are able to satisfy 70% of domestic need. However, recent import duties changes mean that about 60% of domestic producers will have to close down, says Mr. Varshavskiy. (Source: Delo.ru)

 

 

Spain

 

"Floating" market

 

Although most operators expect a fall of prices, the limited offer means that abattoirs are chasing too few pigs. Export demand remains high and some of it remains unfulfilled. (Source: Mercolleida)

 

Further fall of Iberian pork production

The number of Iberian pigs slaughtered in the first half of the year fell by 8% to 1.4 million heads. This is made of 67% intensively fed pigs (cebo), 21% acorn-fed (bellota), 7% pure Iberian genetics and acorn-fed and 4% others. (Source: Eurocarne on line)

   

Pork prices Barcelona Market Week commencing 01 October 2012
Cut Name	Price range (Euro/Kg)
Gerona Loin Chops	2,88/2,91
Loin Eye Muscle	3,98/4,01
Spare Ribs	3,13/3,16
Fillets	5,43/5,46
Round Cut Legs	3,03/3,06
Cooked Ham	2,54/2,57
Rindless Picnic Shoulder	1,95/1,98
Belly	2,54/2,57
Smoked Belly with Spare Rib Section Cut off	2,97/3,00
Shoulder chap or Head Jowls	1,53/1,56
Back Fat, Rindless	1,38/1,41

       

    

Ukraine

 

Industrially produced pigs

 

From 2005 until 2011, the share of industrially produced pigs in Ukraine increased from 33% to 44%. Following in the steps of domestic poultry meat producers, major pig farmers in Ukraine have been creating their own retail networks, such as Pereyaslavsky EKHB (Pyatachok trademark). However, such networks offer little pork fat, as it takes almost twice more pig feed to grow a pig with the fat layer of some commercial value. (Source: PigUA.info)

 

Pork imports up

 

In August 2012, the total pork imports to Ukraine nearly doubled compared to August 2011 and amounted to 24,234 tonnes, which is still 9.1% less than in July 2012. The largest exporter of pork to Ukraine is Brazil, accounting for 51.23% of the total volume. The share of German pork is 27% followed by Polish (10.5%), and Belgian (3.58%). Ukraine also buys pork from the USA, Hungary and the Netherlands. (Source: PigUA.info)

 

 

USA

 

Slowing sow cull and strong expectations for 2013

 

Contrary to expectations, the level of sow cull in September has been lower than the long term average, meaning that producers are looking to 'sit' the period of low prices and wait for the price rebound in the first part of 2013. USDA is forecasting a fall of 3% of production next year which should be enough to tighten prices, particularly as other protein prices will rise. Analysts say the US industry is now efficient, very capital intensive and can weather tough times as long as fixed costs are covered. (Source: various)

Vietnam

    

Vietnamese pork production continues to be hindered by poor genetics, high feed costs and poor pig health experts warn. For instance, feed costs account for 75% of pork production costs there against 50-55% in other countries. Meanwhile, Hanoi authorities are planning to relocate livestock farms out of the city. (Source: Asian Pork)

     

   

US$1 = EUR0.77 (Oct. 9, 2012)