Pig producers feel pinch as prices drop below 220p/kg
© GNP Weakening pig prices on the Continent and reduced volumes sold at retail have been putting pressure on farmgate prices in the UK.
After peaking at 225.65p/kg in mid-August, the EU-spec deadweight pig price has since fallen by 6p/kg.
Despite lower throughputs of pigs, demand has been lacklustre in the UK and in Europe, according to processors.
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Volumes of GB household pork purchases dropped during the summer months, according to data from Kantar, with volumes sold at retail down by 3.7% on the same period in 2022.
Meanwhile, average carcass weights are back above 90kg for the first time since October 2022.
Pig marketing group Thames Valley Cambac said slaughter numbers across the UK are down by about 17% from the same time last year, but demand appears to have slipped even further.
So far during October, GB estimated pig slaughterings have been at about 160,000 pigs a week – 27,000 pigs a week below the same period last year.
Contracts
Scottish pig producer co-operative Scotlean reported that some processors were taking all pigs on offer, while others were limiting pigs to contractual numbers and one processor was working on reduced kill numbers.
Many processers typically increase throughputs moving closer to Christmas to satisfy seasonal demand and also to plan ahead for a reduced number of killing days during the festive period.
Matthew Banks, livestock marketing specialist at Meadow Quality, said there was downward movement on all processor contributions in the past week of 1p/kg.
Mr Banks added that demand was steady generally and the drop in European prices would lead to more market pressure.
European market under pressure
EU pig prices averaged €219.68/100kg (190p/kg) deadweight for the week ending 15 October, meaning prices on the Continent have fallen by the equivalent of 25p/kg since peaking in mid-July.
This is despite a tighter supply and lower throughputs for the year to date.
Figures from the EU Commission showed that EU pork exports to China, which is the EU’s largest export destination, dropped by 11.8% during the first seven months of the year. Meanwhile, exports from the EU to the UK increased by 3.3%.
AHDB livestock analyst Isabelle Shohet said: “EU prices are now establishing a more typical discount compared with GB prices as a result, which could make EU product more attractive to buyers.
“This could be the main driver in recent GB price declines, as the EU is our main supplier of pigmeat imports.”
Cost of production
The latest available industry figures for cost of production remain at about £2/kg, leaving a small margin for producers.
AHDB livestock analyst Isabelle Shohet said: “While prices have been falling, the overall cost of inputs has been easing from the peaks seen last autumn/winter.
“The Agricultural Price Index shows the rate of inflation has fallen, which may ease the cost of production and improve net margins, although some challenges remain with increased interest rates and continued volatility in feed, oil and gas markets.”