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AHDB Pig Market Weekly


18 April 2012

AHDB UK Market Survey - 13 April 2012AHDB UK Market Survey - 13 April 2012

Grain markets continued to display volatility in the first quarter of 2012 with UK May 2012 wheat futures showing a range of £151 to £177 per tonne.

AHDB

Grain market update

The top-end of these values were recorded in late March and continued into early April, primarily fuelled by dry weather concerns in South America.


The 2011/12 marketing season has been characterised by an abundance of wheat, but tight supplies of maize, the world’s main feed grain. Wheat is an alternative feed grain to maize so prices need to broadly follow those of maize to avoid too much demand. On 30 March, the USDA released quarterly grain stock estimates. Stocks of maize in the US as at 1 March were 152.6 million tonnes, 13 million tonnes below the same point last year and the lowest level since 2004. This data reminded the global feed grain market of the delicate availability in the sector.

In Europe, and despite the return of Russian supplies, exports have been sufficient to keep domestic supply and demand finely balanced. This is complemented by the situation in the UK where wheat exports in the seven months to January totalled 1.8 million tonnes, with the total season surplus at 2.6 million tonnes.

As is normal for this time of year, markets are shifting the focus to developing crops in the dominant northern hemisphere. UK November 2012 feed wheat futures are in the region of £155 per tonne, a noticeable discount to spot prices.

Similarly to the old crop, maize remains a principle driver, especially in the US. On 30 March, the USDA released its annual prospective plantings report. In response to strong forward prices, US farmers are expected to increase maize plantings by four per cent to 38.8 million hectares. If realised, this would be the highest area since the mid-1930’s. One of the warmest March’s on record has enabled US farmers to start maize planting early with seven per cent planted by 8 April, compared with three percent a year ago. This gives an early suggestion that US plantings could reach the forecast.

Closer to home, the Northern European dry weather concerns have been quenched by rain in early April. In some regions of the UK, there was more rainfall in the first ten days of April than in the entirety of the winter.

Cattle market trends



Prices

In week ended 7 April, as the Easter weekend approached and retailers favoured increased lamb promotions, the deadweight cattle trade levelled on the week. At 338.7p per kg the prime cattle average price was the same as in the week earlier. Despite this, the price of R4L steers edged even closer towards the 350p per kg threshold, up marginally to 346.7p per kg. The price of R4L heifers was unchanged on the week at 345.2p per kg, but still represented an uplift of two per cent since the turn of the year. The cow market is reportedly finely balanced at the moment with any changes in European demand quickly affecting manufactures requirements. In the latest week the price of -04L cull cows declined two pence on the week to 276.4p per kg.

In week ended 11 April March the liveweight prime cattle trade at GB auction markets eased on the week. Steers and heifers were both back a penny to 189.7p and 192.2p per kg respectively. The average price for cows at auction increased marginally on the week to 133.1p per kg.

Consumption

According to the latest Kantar Worldpanel data in the 12-week period ending 18 March 2012, household purchases of fresh and frozen beef declined four per cent on the year to 71,900 tonnes. Expenditure increased seven per cent to £494 million, as increased retail prices more than offset the lower household purchases. The decline in the volume of beef purchased was largely as a result of the reduced number of price promotions. Household purchases of most beef cuts were lower than in the corresponding 12-week period last year. Roasting joints and frying/grilling cuts were the worst performing, with purchases down 12 and 10 per cent respectively, as consumers continued to trade down to cheaper protein alternatives.

However, in the 52-week period, household purchases of fresh and frozen beef were marginally higher on the year at 305,000 tonnes. Expenditure increased five per cent to £1.95 billion as a result of a similar increase in the average retail price. Sales of second quality stewing beef were seven per cent up on the year while household purchases of mince were at a similar level to the year earlier.

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