The AHDB (Agriculture and Horticulture Development Board ) in the UK wasted no time in warning that the Brexit vote has implications for the way the UK trades meat not only within the European Union but also with Third Countries “as most, if not all, Export Health Certificates and trade agreements have an EU dimension”.
AHDB reports that UK exports of fresh and frozen pork grew significantly in April, to 17,200 tonnes, increasing by 18% on the same period last year. Exports to China doubled in April and there were strong increases to the Philippines and the USA. Export value rose by over 29%, to £19.3m. The growth of offal exports is spectacular. They are up 239% year-on-year in value, to £5m and the total to date represents £19m (+108%). The UK exported a record 28,000 tonnes of pig offal between January and April.
Meanwhile, EU exports of pork products (pork, offal and processed products) reached €660m in April. In particular, EU fresh and frozen pork exports rose by 63% year-on-year in value.
CONTRADICTION IN PORK MARKETS
Chinese Market
Domestic prices are on the decrease in China, with a 5% drop in week 25 to RMB 20.25/kg (around €2.75/$3.05). Pig inventory has not really recovered yet but there is always a reduction in pork consumption during the summer months as the temperature increases. This will have knock-on effect for the price willing to be paid for imported products.
We already see bids for EU/Chile/North American items coming in much lower than in the previous two months. Some producers have adapted quickly with others taking some time to understand or believe the shift in the market.
EU Market
After a number of consecutive weeks of rising pig prices in the EU the German producers raised the price once more to €1.63 per kg. As they are not recovering this through increased EU prices for pork cuts, and with the Chinese market undergoing price correction (see above), there seems little rationale for these continued price increases. The one plausible reason given is the low availability of pigs for slaughter, but don’t be surprised to see an end to these price rises in the coming weeks.