Pig producer prices are well ahead of last year but the degree of increase has fallen to around 9%, compared to the 12% year-on-year increase seen in early August, according to Stuart Ashworth, Quality Meat Scotland’s head of Economics Services.
“Across the UK, pig slaughterings have modestly changed from last year,” said Mr Ashworth.
“However, with carcase weights increasing, so does production. This means the steady increase in producer price seen over the past 12 months points to an underlying strength in the market.”
That strength in the market has been aided by firming prices across Europe over the first half of 2013, making the UK market less attractive to European suppliers and subsequently impacting on imports, which have declined by 4% so far this year.
Conversely, however, the UK was able to increase its exports.
“The net effect of this trade meant that the quantity of pigmeat on the home market fell by 3% over the first half of the year, encouraging price rises,” said Mr Ashworth.
“More recently, however, European pig prices have been falling while UK prices have continued to increase, but at a more modest rate.
“Consequently, the market dynamic may change and producer price increases will be harder to achieve.”
As well as price increases helping producer confidence, a further positive factor is the steadying in the cost of the producer’s largest cost feed.
“Twelve months ago feed prices rose significantly on the back of tight global supplies and producer margins fell sharply,” said Mr Ashworth.
“More recently, as the northern hemisphere harvest got under way, protein and grain prices have eased and are currently trading around 10 to 15% lower than 12 months ago.
“Furthermore, many producers have invested heavily in recent years to improve the health and productivity of their sows, which has paid dividends in steadily increasing litter size and reduced mortality.”