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AHDB Pig Market Weekly


22 June 2012

AHDB UK Market Survey - 22 June 2012AHDB UK Market Survey - 22 June 2012

Weather issues have been the key driver of new crop grain prices this spring.

AHDB


Feed update

UK November 2012 feed wheat prices have recently been trading above £155 per tonne as markets become more anxious over 2012/13 supply levels. Weather in the US Eastern Corn Belt has been hot and dry as maize crops enter into key development stages. This is casting further doubt over the USDA’s current yield forecast, which until August, is based upon historical trend rather than crop condition.

Anxiety in the maize market, transfers directly into the wheat market as these grains are substitutable with one another in global feed rations. It is expected that wheat availability will be lower in 2012/13 due to a number of weather issues. In Continental Europe, winter kill and poor growing conditions in early spring look set to put a check on production. In Russia, dry conditions in mid-May fuelled speculation over crop losses, but rain has arrived since. In Ukraine, winter kill has slashed production forecasts for wheat, diverting land toward maize. This may result in a record Ukrainian maize crop with exports targeted at Mediterranean Europe.

For the UK, crops were seen to have good potential as at the end of May. However, much of June has so far provided poor weather conditions for crops. High disease pressure, lack of sunshine and risk of lodging are all important factors as crops start to build yield.

Protein meal prices remain well supported with UK soyameal prices at record levels and in excess of £350 per tonne. Following the drought impacted South American soyabean crop earlier in 2012, US crops may also be suffering from the extreme heat in the Corn Belt. Import demand from China remains robust.

With so much variation in weather, markets await the clarity of harvest as well as US plantings and stocks data on 29 June.

Cattle market trends



Prices

In week ended 16 June, the overall prime cattle deadweight average price strengthened three pence on the week to average 337.49p per kg. Reports suggest that beef sales are following the changing weather conditions and that the lack of available cattle is resulting in processors struggling to source adequate product. The price of all categories of cattle increased week on week, with R4L steers and R4L heifers both increasing three pence to average 346.0p and 343.8p per kg respectively. The price of R3 young bulls increased by four pence to average 331.5p per kg. For the second consecutive week the price of –O4L cows strengthened three pence on the week to reach a year peak of 282.3p per kg. At this level –O4L cows are 17 per cent dearer than they were in the corresponding week in 2011.

The liveweight trade in week ended 20 June showed a marked rise with the all prime average price increasing two pence on the week to 191.9p per kg. Steers were up two pence to 193.4p per kg while heifers were over three pence dearer at 198.1p per kg. The price of young bulls levelled on the week at 183.7p per kg. In contrast, and despite lower throughputs, the average cull cow price at GB auction markets eased over a penny on the week to 130.9p per kg.

Regional slaughterings

Continuing the trend in the year so far UK prime cattle slaughterings in May remained well below 2011 levels as supplies continued to be tight on the back of lower calf registrations in recent years. The decline in prime cattle numbers was evident in most regions of the UK. In total prime cattle supplies were back eight per cent on the year. Heifer numbers recorded a decline of 11 per cent year on year while steer throughputs fell one per cent. Young bull numbers recorded the largest fall, down 17 per cent, reflecting the low levels of dairy male retentions in late 2010 and early 2011. In the year to date slaughtering are back eight per cent compared to the first five months of last year.

There was also a significant decline in the number of cull cows slaughtered. At 42,000 head cull cow numbers were back five per cent on the year. As with prime cattle, in the year to date cow slaughterings are also back on the year. At 232,000 head they are five per cent.

In May prime cattle carcase weights were higher on the year while cull cow weights were slightly lower. This mitigated the reduced throughputs to a modest degree and overall beef and veal production in May fell six per cent on the year to 69,400 tonnes.

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