Pig herd contracts and prices improve
AT long last, the GB Standard Pig Price (SPP) finally hit the £2 per dwkg mark last week, following 30 consecutive weekly increases which, coupled with reduced supplies, is expected to trend higher in the coming months.
In the past 30 weeks, GB prices have increased by 45% and are now 28% ahead of this time last year and the five-year average.
However, while farmgate prices are on the up, costs of production have soared, squeezing margins more than ever.
There is, though. light at the end of the tunnel said Iain Macdonald, market intelligence manager at Quality Meat Scotland, who expected a tighter pig supply driven by a reduction in the pig herd in response to the severe pressure on producer finances.
“In the nine summers since the SPP was introduced in 2014, this is only the third time that prices have trended higher in August, the other two years being 2016 and 2019, when a shortage of pork in China drove the global pork market higher.
“This year it has come despite a large increase in UK pigmeat supply during the first seven months, with higher exports to the EU unable to offset a reduction in trade with China, the impact of higher carcase weights on domestic production and increased imports,” said Mr Macdonald.
He added that there has been no pig census results for Scotland since June 2021, but English census figures he said can at least provide some indication of the situation at GB level.
By December, 2021, England’s sow herd showed a year-on-year decline of 7%, which was accelerated to 17% by June, 2022, with fattening pig numbers going from an 11% year-on-year increase last December to a 1.4% decline by June, 2022.
After a 1% increase in slaughter numbers in the first half of 2022 at GB abattoirs, there was a 4% decline through July and August combined. However, an ongoing labour challenge may have also factored.
EU prices have reached 183p/kg, meaning a 9.5% price lead for the GB SPP, down from 20% at the beginning of August. EU slaughter numbers declined by 3% in the first half of 2022 and are expected to fall further given that the EU Commission is forecasting a 5% decline in EU pigmeat production in 2022.