October 30, 2012

                                                                                             

BPEX Export Bulletin - October 2012 (Week 42)

  

   

This week's export news

 

Pork remains scarce on the European market with strong demand from Central Europe, some of it remaining unsatisfied. The new census results from Poland (see below) indicate the potential for further tightening of supplies.

 

 

Belgium

 

Exports seem to have peaked

 

Belgium pork exports peaked in 2010 with 753,000 tonnes and declined in 2011 to 740,000 tonnes. In 2012, a small fall is also expected. Sales to Greater China remain relatively small at 20,000 tonnes. Russian sales are declining at around 30,000 tonnes, while Korean shipments are stable at around 14,000 tonnes on a yearly basis. Belgium exporters remain highly focused on the EU with 86% of trade. Poland has emerged as the second largest client with 80,000 tonnes in 2011. (Source: Belgium Meat Office)

 

 

Bulgaria

 

Unfit meat

 

The meat processing plant of Mekom from Silistra in the Northeast of the country has been closed as four tonnes of unfit pork, lamb and veal were found during a site inspection. Mekom, with 1,100 employees, runs a feed mill and a pig farm as well as fattening farms for sheep, cattle and water buffaloes. The company also owns agricultural land. The meat processing company, created in 1906, is one of the oldest in Bulgaria. (Source: various)

 

Canada

 

Producers under new ownership?

 

Big Sky and Puratone, respectively the second and fourth largest Canadian pig producers, have recently been placed under Court protection with joint debts of more than £100 million (see bulletins passim). Maple Leaf and Olymel, the two largest Canadian pork processors and, potentially, a US pork group have already declared an interest in buying the producers. Production is continuing and the herds are unlikely to be liquidated. (Source: Reuters)

 

 

Denmark

 

Market

 

On the European market, fresh legs are being sold at similar price levels. The demand for other cuts is slightly lower. However, export prices are fairly similar. On the British bacon market and on markets outside Europe, the situation remains unchanged. (Sources: Danish Crown, Tican, Danish Food Council).

 

Continuing high pig prices

 

EU pig prices have increased over the past year and high pork prices are predicted to continue well into 2014, according to a new report from Rabobank. EU sow numbers in May were 4% lower than the year earlier levels. The decrease is due to a combination of continued low profitability, high feed costs and the 2013 partial stall ban. A further decline in the sow population is expected over the next 12 months, according to the report. The EU Commission predicts a decrease in pork production within the EU of 3.2% in 2013. Pig prices in the EU, according to Rabobank, will be supported by demand on export markets. The report concludes robust global demand should see a favourable outlook for EU pig meat exports. However, lower production will be a limiting factor for export volumes. (Source: Landbrugsavisen)

 

Danish pigs flown to Russia

 

A large farm in Russia had 1,200 out of a total of 5,000 breeding animals flown in to take advantage of prevailing high pork prices without the delay of rearing breeding replacements themselves. The operating loss would be too high, says CEO Holger Sorensen, Porc-Ex. The breeding animals will form the basis for annual pig production of 150,000 finishers. The purchaser has approximately 27,000 sows at plants situated in several regions of Russia. The total delivery of 5,000 animals is based on DanAvl genetics and this is the first time that Porc-Ex has had Danish pigs flown on such a scale. (Source: Landbrugsavisen)

 

New user payment on Danish exports

 

A new payment on export certificates is an additional cost in the line of Danish special charges. For Danish Crown, the new charges will add an additional cost of €340,000 per year. According to Danish Crown CEO, Kjeld Johannesen, the new fee is effectively a tax on exports and he predicts Danish exports will suffer as a result. He also expects slaughtering to fall next year by a further 5% as a result of these charges, adding financial pressure to both the agriculture and food industries. If Denmark does not offer both farmers and slaughterhouses a competitive framework, it will result in piglets being transported out of the country for finishing, slaughtering and processing. Along with the piglets, Danish jobs and foreign exchange earnings will also be affected, assesses Kjeld Johannesen. (Source: JyllandsPosten)

 

The Finnish meat group, HK Scan is cutting production in Denmark and Sweden. Some 220 staff is affected.  In Denmark, the cold cut factory Kreatina at Bjaeverskov closed recently, while cutting of smoked products in Sweden has been centralised to the Halmstad plant. The plant in Kristianstad has suspended night-shifts for the time being to save additional cost. HK Scan expects to improve its profits by approximately €10 million as a result of the changes. HK Scan is among Europe's ten largest meat groups. The company is listed with the major shareholders being Finnish and Swedish farmers. (Source: Landbrugsavisen)

  

Danish Slaughterhouses - payments week commencing 15 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	Unchanged	Unchanged
Boars (Above 109.9 kg)	Euro 1.095	Euro 1.095
Difference to last week	Unchanged	Unchanged

  

Dominican Republic

 

More salami stories

 

Following recent scandals, the crisis in the processed pork sector is such that the trade body has asked for government help. Despite the low meat content of local processed meat products, the fall in demand is depressing pork prices. (Source: hoy.com.do)

 

 

France

 

Observatory of prices and margins

 

The French observatory published its latest results, which do not match precisely with figures published earlier by the FCD (Federation of retailers). These results are based on the collection of data in seven different retail chains. The margins of the meat shelf vary on a scale from one to six. Five of the retailers have a negative margin (-1.9% in average). Traditionally margins at the charcuterie shelf are fairly large. For 1kg of cooked ham sold for €10.00, the retailer's margin is €4.21, the processor's margin (processing up to retail pack) €1.62 and the abattoir/cutting plant's margin €0.61. Today, retailers are still resisting the reduction of their margin to compensate for feed increases at production level.

 

Fleury-Michon

 

At a time when business in Canada is struggling, to a point where FM are thinking of stopping their activity in North America, the new factory located in Cambrai is about to start producing. With 52 staff, the factory will cook the hams which will be packed there, and from February, 38 additional staff will join the site. The total capacity of the factory should reach 3,000 tonnes by the end of 2013 and by adding lines, could increase to a maximum of 10,000 tonnes.

 

Cooperl to end castration

 

The largest French producers' group plans to end castrating piglets by March 2013. Cooperl farmers produce 5.2 million pigs per year. (Source: Boerderij Vandaag)

 

Pigs

 

Prices are still slowing down in France. The basic price lost 1,5 cent on Monday in Plérin, in a context where offers are widely sufficient to cover the demands of abattoirs.

 

Piglets

 

The weakness of supplies continues to maintain prices. Considering the latest slowing down of prices for pork, lower FNP-FNCBV prices were confirmed last week, -10 eurocents for 25kg and -2,08 Euros for post weanlings.

 

Cuts

 

The market was very calm during this third week of October. There is pressure on retailers for the price of the cuts due to the slowing down for pork butchers. Slaughterings for cuts tends to resist with more or less success according to the operator.

   

Pork prices Rungis - Week commencing 15 October 2012
Cut name	Price range (Euro/Kg)
Back fat, rind-on	0,85
Trimmings	1,73
Leg	2,77
Loin including chump	3,17
Loin excluding chump	2,95
Belly extra without trimmings	2,85

 

 

Germany

 

Market

 

Quotations for loins, collars and hams are weak, which is typical for this time of year. A rather sluggish demand and increasing slaughter numbers added to the trend. Slaughter numbers for week 41 are estimated to have reached 1,050,000 pigs (week 40 = 912.021). (Source: AMI)

 

Dutch label

 

Westfleisch Coesfeld is the first German abattoir to have gained certification for the Dutch animal welfare label 'Beter Leven'. (Source: www.westfleisch.de)

  

Pork prices Hamburg Market Week commencing 15 October 2012
Cut name	Price range (Euro/Kg)
Round cut leg	2,45/2,60
Leg (boneless, rindless max fat level 3mm	3,30/3,50
Boneless Shoulder	3,00/3,05
Picnic Shoulder	2,45/2,55
Collar	2,60/2,80
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.	2,30/2,40

  

  

Italy

 

Prices "on fire"

 

The scarce offer is maintaining cut prices for processing at very high levels. Only fresh loin prices are down 10% to €5.00/kg. (Source: Mercolleida)

 

Rovagnati on the move

 

The major pork processor plans to increase its turnover from €238 million in 2010 to €340 million in 2016 according to recent figures, it should be able to achieve this growth. Net margins will remain small and are only predicted to reach €1.3million, with low return on investment. It has recently bought a 30,000 pigs farm near Parma. (Source: Largo Consumo)

 

 

Poland

 

Production still falling

 

Results of the August census have been published this week and are alarming. The number of sows is down 8% and the total number of pigs is down 14% to 11.6 million. (Source: Mercolleida)

 

 

Russia

 

Bauer Technics to build giant complex in Russia

 

The Czech company, Bauer Technics won a tender for the construction of a large pork production complex in Khakassia, Russia. The cost of the project is estimated at nine billion Czech Korunas (Over US$477 million). Construction should be finished in December 2014 and will be carried out by the Czech company, PSG. The complex will comprise two pig farms with a capacity of 150,000 pigs each, a pork processing unit and a warehouse. (Source: Prague-express.cz)

 

New outbreaks of ASF, Classical SF

 

On October 17, Rosselkhoznadzor reported a new outbreak of ASF in Tverskaya Oblast and Krasnodarskiy Krai. Currently, measures are taken to prevent further spread of the disease. An outbreak of Classical Swine Fever was reported from Radde. According to reports, 88 animals died and another 100 were slaughtered. Quarantine was introduced in the region and veterinary authorities advised people to abstain from buying pork. (Source: Pigprogress.net)

 

Imported Pork Markets (October 7)
Moscow	St.Petersburg
Leg (with bone): USD 5.27/kg	Leg (no bone): USD 4.97/kg
Liver: USD 7/kg	Loin (with bone): USD 2.7/kg
Heart: USD 2.8/kg	　
(Source: Meatinfo.ru)

   
 

 

Spain

 

Spain follows French lead

 

The recent weakness of the French market has led to a small reduction of the Lleida quote of €0.01. However, the market remains fundamentally sound. (Source: Mercolleida)

   

Pork prices Barcelona Market Week commencing 15 October 2012
Cut Name	Price range (Euro/Kg)
Gerona Loin Chops	2,85/2,88
Loin Eye Muscle	3,90/3,93
Spare Ribs	3,13/3,16
Fillets	5,43/5,46
Round Cut Legs	3,00/3,03
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	1,33/1,36

   

        

Trinidad and Tobago

 

Cut in farming budget

 

The farming budget has been cut by a third to TT$1.3 billion (£130 million). Trinidadian food production, including a small volume of pork, appears once again to be in crisis, despite repeated government declarations of treating agriculture (alongside tourism) as a priority sector. The proposed collaboration on food production with Guyana does not seem realistic and land reform is still awaited. (Source: TT Newsday)

 

 

Ukraine

 

Pork production up

 

Until September, the volume of pork production in the Ukraine increased to 351,500 tonnes. This represents 7.4% increase compared with the results for the same period in 2011. (Source: PigUa.Info)

 

Unidentified pig deaths

    

According to the State Veterinary and Phytosanitary Service of Ukraine, the company Agro Plus 2006 (Kamensky district, Cherkasy region of Ukraine) recently reported the death of 240 pigs. At first, the farmers suspected ASF. Following laboratory analysis of samples taken from the pigs, ASF virus was not found and the cause of death remains unknown. (Source: Unian.net)

USA

  

Producers cut their losses

 

With prices going upwards and slightly keener feed prices, producers have cut losses to an average US$1.53 per head in week ending 12 October. (Source: Pork Network)

 

Pork exports remain buoyant

 

Overall, pork exports to the end of August remain buoyant at 1.1 million tonnes (+8%). This increase is led by larger shipments to China of 178,000 tonnes (+36%) and Mexico of 281.000 tonnes (+6%). Exports to Canada at 137,000 tonnes and Russia at 36,000 tonnes are also up. There was a decline in shipments to Japan, which still remains the largest market with 291,000 tonnes to the ASEAN region. Increased production and the low prices have contributed to this strong performance. (Source: USDA)

 

Weaker consumption

 

Pork consumption showed steady decline as the product has still not found its strategic position between beef and chicken. In 1980, the US people consumed 33.3kg per person. In 2012, this is expected to fall to 26.6kg and 2013 forecasts point to consumption falling to 25.9kg. (Source: MICA)

 

Major producers show stable herds

 

Major US pig producers are showing a stable picture. Only Smithfield Foods have added 24,000 sows to total 862,000 head. The fourth largest producer, The Maschoffs, have added 4,000 sows to 196,000 head. Smithfield has invested US$100 million over the last three years, closing old farms to improve productivity. Smithfield also owns 100,000 sows in Mexico, 80,000 in Poland and 47,000 in Romania with a total of 1.089 million sows. (Source: Mercolleida)

 

Poultry leads inflation

 

Pork, whose price is languishing, lags behind poultry, which recorded price increases of 6%. Over the period 2009-11, poultry and pork prices work very much in tandem. This is not only an issue with the USA and begs questions on pork wholesale pricing. (Source: Steiner Consulting)

  

  

US$1 = EUR0.78 (Oct. 30, 2012)