“Feed is the largest input cost for pig producers and pigs currently being sold will have been produced with high-cost feed,” observed Ashworth, pictured below. “However, looking forward, there is some prospect of feed prices falling. Prices for feed grains have eased back as the European harvest got under way and currently stand around £50 per tonne lower than last year.”
The cost of protein feed has also slipped back as a result of the global production of soyabean meal being around 6 per cent higher than last year. Latest soyabean prices, although edging up in the past couple of weeks, are around 15 per cent lower than this time last year, he said.
As a result he believed producer margins would slowly improve but not possibly to the extent of tempting producers to expanding their sow herds.
“Slaughter statistics show that across the UK sow slaughterings over the first six months of the year were 2.5 per cent higher than last year, although they have fallen below year earlier levels during July,” he said.
“Although the December census showed an increase in gilts intended for breeding, the combination of higher sow slaughterings in the first half of this year and the 2 per cent decrease in sows reported in December do not point towards any material increase in the sow herd, and hence future production, unless the herd has become more productive.”
Like all food nowadays, pig meat values in this country are influenced by European and world markets. Currency shifts are currently benefiting UK pig producers with the competitiveness of imported European pigmeat on the UK market reduced from 12 months ago. Meanwhile, UK exports to mainland Europe are more attractive, said Ashworth.
As a result of this beneficial swing, exports of UK pork were more than 20 per cent higher than last year, with growth in sales to both the EU and Asia. On the import side, the amount of pork coming into the UK was marginally up but imports of bacon and ham were more than 10 per cent down.
The European sow population fell by 4 per cent, according to a census in December, and this is causing a tighter supply of pigmeat, a situation that will continue to be applicable for some time.
“The current forecast is that pigmeat production across Europe will be 4 per cent lower over the second half of 2013 than it was last year,” said Ashworth.
But it is not just currency that is affecting the pigmeat trade as a Russian ban on imports from the US, Canada and Brazil over concerns about the use of growth promoters has created a greater demand from Russia for European pigmeat, according to Ashworth.
At the same time, demand for pigmeat from China and Hong Kong continued to grow, he added.