The challenges facing the European pig sector are familiar across all livestock sectors, thanks to an increase in the volume of meat available and a volatile export market influenced by exchange rates and market access.
“The loss of export markets in Russia in February 2014 resulted in EU pigmeat exports falling by 5% during 2014 despite growth in exports to other countries, particularly China, Japan and South Korea,” said QMS head of economics services Stuart Ashworth.
With Russia still excluding EU pigmeat, the growth in sales to other markets is vital, he said.
However, the mix of products demanded, the balance of fresh and frozen, and recovering production in the US means that, although exports may be maintained in volume, the market is increasingly competitive.
Notably, European export competitiveness has been boosted by a fall in the value of the euro against the US dollar.
“The expectation is that EU slaughterings will fall below year-earlier levels in the second half of 2015, at which time the pigmeat in store will come back on to the market,” said Mr Ashworth.
“Carefully managing the removal of frozen pigmeat stored under the recent aid scheme, which must occur in most cases after 90 days of storage, will be important in maintaining some stability in the market.”
The European Commission was persuaded to introduce private storage aid for a limited period to support the market after, at the beginning of 2015, European pig prices had fallen to 18% lower than last year.
This scheme, which pays for the freezing and storage cost of a selection of cuts has now ended, having taken almost 64,000 tonnes into store.
The evidence, in terms of the movement of European pig prices is that this introduction of private storage aid achieved its objective of supporting the market, said Mr Ashworth.
However, UK producers did not see so much benefit, with pig prices above the EU average and, during the period of private storage, UK pig prices remained broadly steady at around 131ppk compared to 102ppk in the rest of the EU.
On the plus side for producers, Mr Ashworth noted feed costs had fallen sharply for a second year.
Feed wheat is down 35% year-on-year and nearly 50% from two years ago.
Meanwhile, soyameal is around 15% cheaper to buy than in May last year.