According to to the latest report published by the European Union "Short-term outlook for arable crop, meat and dairy markets", marketing year 2012/13 in the EU saw low grain availability especially for feed, high prices and low stocks. Cereal, oilseed and protein crop harvests in 2013 have so far turned out considerably higher than last year and relieve the market tightness at the start of the marketing year 2013/14. All major individual crops see an increase in harvest from last year, up by more than 8% on average.
The decline in the 2013 production of beef and pig meat is partly compensated by an increase in poultry meat production. A different picture is expected in 2014 with beef and pig meat production recovering due to the improvement in producer margins and the increase in availability of dairy calves. In addition, the adaptation to the new welfare rules in the pig sector should be completed and should imply a halt in the decline in sow numbers and an increase in pig slaughterings.
Pig meat – adaptation to new welfare rules continues
According to the May-June 2013 pig herd survey, available for 13 countries representing 90% of EU total, pig numbers dropped by -1.3% over the past year with the main EU producers recording negative developments: Germany -1.6%, Spain -2.9%, Denmark -1.2%, France -0.6% and Italy -6.6% while the Netherlands' pig herd remained stable; breeding sow numbers continue to decline compared to May- June data 2012 (-2.4%), particularly in Germany (-5.4%) and Spain (-6.5%). This indicates that farmers' adjustment to the EU welfare Regulation on sow stalls is still on-going and it should imply a lower number of slaughter pigs produced in 2013 for the second year in a row.
In the first six months of 2013, the number of pigs slaughtered was 1.1% lower than last year but thanks to a growth in average carcass weight, the production decreased by only 0.6%. The current estimates indicate that in spite of the current improvement in margins resulting from lower feed prices and higher pig meat prices, the decline in slaughterings compared to last year could be more pronounced in the second part of 2013. This could lead to an overall production decline by 1.2% this year with a stronger decline in the EU-N13. In 2014 pig meat production should start recovering as farmers would have completed the adaptation to the new welfare rules.
In a context of tight supplies, good weather conditions this summer improved demand and boosted pig meat prices since June and, in August, they were at 190 EUR/100 kg carcass weight, a level comparable to the record of September last year. Tightening of supply throughout 2013 should lead to lower exports over the projection horizon; nevertheless, Russia would keep its position as main destination with more than one fifth of EU exports (in a context of Russian concerns over the use of the feed additive - Ractopamine in the US and Canada creating opportunities for EU producers). China could slowly become the second market for EU pig meat. Imports are expected to stay within the range of 17-20 thousand tonnes. Also in the pigmeat sector, consumption is affected by low domestic availabilities and higher prices. For the third year in a row, per capita consumption is declining but 2014 should mark a marginal improvement.
October 2013/ Short-term outlook for arable crop, meat and dairy markets/ European Union.