Pork market outlook

September 2024

• Production growth in 2024 driven by higher carcase weights, while clean pig kill will support production in 2025
• Small decline in the female breeding herd for 2024, but some growth expected over the next couple of years
• Challenges continue for export markets with increased geopolitical tensions
• Imports see support from foodservice demand and competitive EU product pricing
• Overall demand picture remains unchanged for 2024, driven by declining retail volumes, but flatter demand is expected in 2025, following economic trends

So far 2024 has been a period of market stability for the UK pig industry with supply and demand seeming to be in relative balance. Pig prices have seen little movement since the start of the year, with the EU spec SPP easing just 3.5p (w/e 14 Sep), estimated quarterly cost of pig production has recorded barely any change since Q2 2023, and although net margins have eased slightly, they remain in a positive position at £15/head (Q2 2024).

It has not all been plain sailing though, continued wet weather from the latter part of 2023 and well into the spring of 2024 created challenges for many producers and dampened industry sentiment. Interest rates have remained stubbornly high and although inflation rates have fallen significantly, prices for goods and services continue to rise. This puts pressure on the working capital across the supply chain and changes the dynamic of consumer spending. Additionally, labour shortages and the increased cost of labour remain an ongoing issue.

Despite these challenges, UK pig meat production has been holding strong for the year to date (Jan-Aug) at 631,500 tonnes, growing 3.2% compared to the same period last year. However, it has not been steady growth. Volumes in Q1 were down 1.6% year on year as pigs were pulled forward to meet Christmas demand at the back end of 2023, meanwhile Q2 saw volumes up 4.4%, however this is comparing to a historic low.

Although slaughter numbers have followed the trend of production, numbers have lagged behind. In the first eight months of the year clean pig kill totalled 6.78 million head, a 1.6% increase on last year. Much of the year-to-date production growth has been driven by higher carcase weights, averaging at 90.1kg Jan-Aug, an increase of 1.3kg on 2023. However, sow and boar throughputs have also picked up year on year, adding to production gains.

For the rest of the year, we expect to see growth continue through Q3 and Q4. Throughputs have been ticking up in recent months, and June census data shows a substantial increase in the number of weaners (finishing pigs under 29kg) which will be maturing over the coming months. Taking these market trends into account, we forecast that UK pig meat production will end 2024 at around 951,000 tonnes, a year-on-year increase of 2.7%, with clean pig kill up 1.5% at 10.20 million head.

Looking ahead to 2025, we anticipate smaller year on year growth, weighted to the second half of the year. We forecast that pig meat volumes will end the year up just 0.9% on 2024, driven by a 0.8% increase in clean pig slaughter with minimal change in carcase weights. A major risk to this forecast would be a disease outbreak. We have seen African Swine Fever (ASF) move closer to our borders this summer, with Germany reporting several cases in the Western region, near to the border of France and Belgium.

The latest Defra census showed that the English female breeding herd has fallen 2% in 2024. The English pig herd makes up approximately 75% of the UK figure and therefore has a larger bearing on the overall UK data sets (UK population data is due December). However, there has been mixed sentiment across industry. We have no doubt that some producers have departed the industry over the last 12 months, meanwhile others have reported their intensions to expand. To balance these the two sides of the story we have softened the overall UK decline to 1%.

Looking longer term, minor growth in the breeding herd is forecast over the next couple of years, if market conditions are favourable. However, these estimates would only see the herd size return to 2022/2023 levels. No recovery to historic pig population size is expected in the foreseeable future.

It has been a mixed year for trade so far in 2024. Exports have been challenging with subdued demand from key importing nations, such as China, and increased competition from major exporters including Brazil and the US. As a result, in the first half of 2024, UK export volumes of pig meat have fallen 2.4% to 148,000 tonnes, the lowest volume since 2015. The fresh/frozen category has seen the largest loss, while offal shipments have been steady year on year holding onto a 47% market share of export volume. However, the latest data shows that shipments in July were up nearly 12% year on year, moving year to date export volumes more in line with those seen last year.

Imports on the other hand have seen year on year growth in the first half of the year, up 1.4% to 387,000 tonnes. Although fresh/frozen remains the largest product category, sausages have seen the largest volume growth. The price differential between the UK and the EU has widened significantly in the first half of 2024 compared to 2023, leading some to view EU product as more attractive on a cost basis. Paired alongside this, a weakening Euro is also likely to have encouraged some buyers to look at the continent when sourcing product. The latest data shows that UK imports in July were lower than the same month last year by almost 1%, but strong gains in previous months keep year to date volumes higher.

Looking to the rest of the year we expect little change in the current market situation. This means we forecast UK exports to end the year back by 2-3%, meanwhile imports increase 1-2%.

Thinking ahead to 2025, it is expected that export volumes will continue to be a little subdued as global competition strengthens. Markets for fifth quarter will remain vital in maintaining carcase balance and value across the supply chain and are expected to continue to dominate the export basket.

Import volumes are likely to continue to see some support if EU prices continue to hold a larger price differential and demand, especially in the out of home market, remains steady to firm.

A key watch point for trade will be the ongoing fall out between China and the EU. If China imposes high tariffs on EU product, less volume would be absorbed by this market and therefore lead to a potential surplus of product. Although increased tariffs may lead to some increased demand from China for UK product, our shipment growth would be limited by production. It is also likely that wider UK export volume would be negatively impacted as surplus EU product would create further competition in other key importing nations. Alongside the export risk there is also a risk of increased EU product entering the UK likely driven by downwards pressure on product pricing. This is a market development we will be keeping a close eye on in the coming months.

GB pig prices saw minimal movement in the first half of the year and remained relatively stable over the summer as supply and demand were seemingly in balance. Demand has been easing, not helped by disappointing summer weather. In the most recent week (w/e 14 Sep) the SPP moved marginally lower, with throughputs lifting, alongside pressure from easing prices across the EU.

As forecasted production and demand travel in differing directions across the final quarters of 2024, there is potential for GB pig prices to see downward pressure in the coming weeks and months, although there may be some seasonal uplift nearer to the key Christmas demand period.

The dynamic between the UK and EU will also remain a key factor in pricing. If China takes in less product from the EU this would likely result in a surplus of product on the market, therefore pressuring prices further. Exchange rates have been volatile this year on the back of major political elections, changing economic policy, and increased geopolitical tensions, all of which will continue through the rest of the year as we await the US presidential election on 5 November.

In the year-to-date (32 w/e 4 August 2024) retail demand for pork fell 2.2% year-on-year according to Kantar while the foodservice market has recovered better than expected with volumes up 5.2% (AHDB estimates). For more details on recent trends and cut specifics, see our retail and foodservice dashboards.

For the year ahead we expect inflation will continue to fall, and wages will continue to rise. The overall economic outlook will improve, although there are headwinds, including world conflicts, which have the potential to derail this.

This means that some shoppers will feel genuinely better off, while others will continue to struggle and look to make savings when then can. After three years of overcoming challenges and reconsidering how to spend their money, we expect any changes in shopping behaviour will be gradual.

Overall, our forecast for demand remains unchanged from January. Pork volumes for 2024 are expected to be down by 2% compared to 2023 and by 4% compared to 2019. Hopefully with increasing positivity in the economy 2025 is expected to see a flatter performance.

In retail, the price difference between pork and chicken is widening, and we expect to see more shoppers switching out of the pork category than it gains from beef and lamb. However, pork is likely to continue to benefit from switching from more expensive proteins as well as shoppers moving some of their out-of-home spend to in home. Cheaper pork cuts, such as mince and burgers have done well, and this is expected to continue. However, shoppers will continue to restrict how often and how much they buy in store – by reducing waste and stretching meat over more meals. Meals eaten for health reasons is also continuing to decline (Source: Kantar Usage) but we expect to see this start to recover in 2024. However, this is not a benefit to pork, as many consumers do not currently associate it with health. We therefore predict that pork volumes via retail will continue to decline for 2024.

The out-of-home market for pork has recovered better than expected. Takeaways continue to grow and remain much higher than 2019 due to the increase in availability of deliveries with apps, as well as more offerings for pork takeaways. Dine in and on-the-go are now expected to grow slightly year-on-year as consumers are still turning to the foodservice market to treat themselves. In addition, more people returning to the office particularly impacts pork over other meats, as it is more reliant on the food-to-go sales from ham sandwiches, sausage rolls and pasties.

Opportunities for the pork industry to improve demand include:

• For cheaper cuts, encourage tasty and versatile pork dishes which play on value for money. Inspire using batch cooking and filling meals, coupled with retail promotional support.
• For more premium products, capture meal occasions lost from more expensive proteins and the out-of-home market by inspiring treat dinners such as fake aways or restaurant quality dine-in recipes.
• Addressing health concerns by communicating the health benefits of pork, such as B12, protein and lean cuts where applicable.
• Encouraging consumers with the right messaging in-store, online, on pack and in foodservice.
• In the longer term, look to maintain and build consumer trust, demonstrating where farming values (animal welfare, environmental stewardship, and expertise) are shared with consumers. See our consumer reputation landscape hub for more information.

AHDB have a range of marketing activities planned for the year, including a new pork campaign. Please visit our marketing pages for more information. For more insight around consumer demand visit our retail and consumer page.

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