Pork Market Outlook

Pork market outlook

  • 1% rise in UK pig meat production expected in 2019.
  • 1% lower imports should compensate for this increase, although Brexit stockpiling activity remains a risk.
  • 5% export growth is forecast, based on a rise in Chinese import demand.
  • Pig prices are expected to rise.

Production

Clean pig slaughter during the first quarter of 2019 was 2.65 million head, little changed on last year.

The slaughter pace started the quarter above 2018 levels, but slowed. This tightening in supplies likely reflects poorer herd performance last year as the extreme summer weather reduced fertility rates. Increased disease also led to a rise in rearing and finishing mortality.

What next?

  • We expect production to continue growing by around 2–3% per year in 2020 and 2021, assuming improvements to sow productivity and increases in carcase weights. We also forecast the breeding herd to continue expanding into 2020 and 2021, although at a slower pace.

  • There is the potential for market conditions to alter considerably, even before the end of this year, depending on the nature of Brexit. However, there is limited scope for the production outlook to alter significantly over the coming year. One possible exception is sow cullings, which might increase immediately before Brexit, if tariff-free access to the EU becomes unlikely.

Trade

Despite higher import levels in the early part of this year, it seems unlikely that imports will be higher this year, overall.

Domestic supplies are expected to increase towards the end of the year, and consumer demand for pork seems to be flat at best.

It’s also worth noting EU supplies are relatively tight and current forecasts suggest this will continue.

  • An increasing amount of EU pig meat is expected to be shipped to China. This reflects strong import demand, as China’s domestic supply is limited by African Swine Fever. We anticipate UK imports will be about 1% lower, overall.
  • The shortage of pork in China will also create opportunities for UK exporters. Exports grew last year, despite a more challenging global environment, so prospects look good for the year ahead. The ongoing weakness of the pound also helps.
  • Pork exports could reach a new record high this year, although the extent depends on how far Chinese prices rise. Most UK exports are still destined for the EU, but we are still optimistic that total UK exports could grow 5% to a new high of 279,000 tonnes.

Pork consumption trends

The number of meal occasions containing pork have been on an upward trend since the beginning of 2017, following a longer-term decline. Data from Kantar Worldpanel has shown that volume sales of primary pork are up 1.2% year-on-year (52 w/e 21 April 19), slower growth than poultry, but a positive picture compared with other red meat. The performance of cuts has differed, with increases seen for steaks and mince, while chops, total roasting joints and belly are driving declines. Quicker cooking primary cuts, as well as ready-to-cook/marinated products, winning in the market. Leaner cuts such as loin medallions and steaks are also benefiting from increasing concerns about health.

Outside of primary pork, sausages have also seen a recovery, whereas bacon and sliced cooked meat continue on a downturn. This comes from a backdrop of negative press coverage for processed meat. For out-of-home, pork has seen a positive performance, as consumers increasingly demand quick food-to-go-options, with pork delivering here through sausage rolls and sausage/bacon sandwiches.

What next?

We expect a modest decline in primary red meat consumption in the short term, with ongoing pressure from the gradual shift from traditional meat and two veg options (such as roast dinners) towards dish-based cuisines.

There is further pressure from consumers aiming to moderate consumption, often referred to as flexitarians. Kantar Worldpanel defines flexitarians more tightly as consumers cutting down on red meat for health reasons, and sizes this group of people at 8% of the population.

Continuing an upward trajectory for pork and mitigating any modest declines might be possible, if the industry:

  • Continues to innovate products to meet consumer needs of convenience and health.
  • Inspires relevant pork dish-based cuisines.
  • Addresses health concerns by communicating the health benefits of pork.

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Gallery: Pork at a glance

Click the thumbnails below for simple visual explanations as to how the pork market has performed, according to the latest data. Here we look at GB pig prices (SPP and APP), consumption, slaughtering figures, international prices and import and exports.