April 14, 2014

 

Russia's live pig prices up by over 40%

 

 

Since the beginning of 2014, wholesale prices of live pigs in Russia have increased by more than 40%, surpassing the industry record of RUB100 (US$2.80) per kilogramme.

 

The prices of live pig processors and retailers started to increase right behind it, although not as steeply. Alexander Kostikov, Cherkizovo's head of communications and investor relations, noted that the rapid price increase began in March.

 

According to Ekaterina Kumanina, director of external relations for the Dixy retail chain, some processed meat suppliers have already proposed price increases of 7% or more.

 

Due to an outbreak of African swine fever (ASF) in Lithuania and Poland, Rosselkhozhadzor restricted supplies of live pigs, European pork and pork by-products on January 29. Industry experts said that domestic market prices spiked immediately after this.

 

In early January, the wholesale price of live pigs in the Central Federal District was about RUB72 (US$2) a kilogramme, and by early February it increased to RUB78 (US$2.17) a kilogramme.

 

Daria Snitko, the leading analyst at the Centre for Economic Forecasting of Gazprombank, reported that for the week of March 31 to April 6, the price reached RUB102 (US$2.83) a kilogramme.

 

The Central District is Russia's largest consumer of domestic pork and the distribution centre for meat imports to other federal districts. Therefore, this region is the price market-maker, explained Nikolai Birulin, leading analyst of the National Pig Farmers Union.

 

Rising prices should have a positive effect on the financial position of domestic companies in this sector, Snitko said.

 

The country is short of 500,000 to 700,000 tonnes of pork, and large pig farmers could fill this need, so that the country would not be dependent on imported pork.

 

However, the uncertainty over government support is curbing the investment activity of livestock breeders, Kostikov complained.

 

Furthermore, in his opinion, the new opportunities are just a temporary phenomenon. Importers bringing in meat from European countries are hoping for a prompt resumption of supplies, so they are not switching to orders from Brazil, the United States and Canada but may do so if necessary.

 

According to the National Pig Farmers Union, in January and February 2014 alone, pork imports into Russia dropped by 14% to 56,000 tonnes compared to the same period in 2013.