UK pig producers have seen farmgate prices for prime pigs remain fairly static since the turn of the year, with prices currently standing around 2.5% lower than this time last year.
According to Quality Meat Scotland’s head of economics services, Stuart Ashworth, one contributory factor playing on UK prices is a higher throughput of pigs. 
“Weekly slaughter estimates suggest that throughout January, UK pig abattoirs handled 8% more pigs than last year,” said Mr Ashworth.
“Price reporting abattoirs suggest that higher throughputs have continued through February, with around a 5% increase in weekly slaughterings. With carcase weights little changed, domestic pork production has increased and this will have slowed price increases.”
Data from Kantar Worldpanel suggests that retail sales of fresh pork are struggling to hold their own, falling 1% during 2017. This did not necessarily mean weak demand, although retailers raised prices, households spent 4% more money buying pork, meaning that total sales revenues did increase. 
“What these results show is what economists refer to as ‘price elasticity’ – as prices rise, volumes consumed fall and vice versa,” stated Mr Ashworth. 
As production increased in late 2017 and early 2018, supply began to exceed demand, putting some pressure on retail and farmgate prices to clear the market. 
“However, demand for processed pigmeat products, particularly bacon and cooked hams, has been growing, as has demand for ready meals, acting to limit these downside pressures,” observed Mr Ashworth.
In contrast to the UK, most European pig producers are benefitting from price rises through February. All the major producers, with the exception of Denmark, have seen steady price rises throughout February. Denmark, however, did not see gains until the final week of February. 
Despite these recent rises, he said, most European pig producers are seeing farmgate prices 5-10% lower than a year ago. The effect of exchange rates is apparent – the UK producer price in euros is 6% lower than last year but only 2.5% lower in sterling terms. Consequently, the competitiveness of UK pigmeat in the European market is little changed, and vice-versa.
“During 2017, the EU found the Chinese market particularly tough and exports there fell by 25%,” observed Mr Ashworth. 
“Despite some growth in trade with other Pacific Rim countries and the USA, overall EU exports fell 8% in volume. Nevertheless, the signs are that there has been some recovery in exports to China, perhaps helped by recent increases in US pig prices, which may have helped support European prices.”
The latest results from December census around Europe suggest that the European pig herd is growing.  Provisional estimates for the EU-25 show a growth in the pig herd of 2.3% and a growth in the breeding herd of 1.6%. Provisional data from the UK shared with the EU suggests a growth in the UK breeding herd of 0.8%. 
“These census results would suggest growth in pigmeat production during 2018 perhaps back to the levels seen in 2016.  Indeed, European Commission estimates suggest a growth of 1% in pig meat production during the first half of 2018,” said Mr Ashworth.
With production expected to rise across Europe, producer prices will be challenged to match last year’s levels without continued recovery in export activity.  Nevertheless, historic trends would suggest the potential for some seasonal increase in prices between now and the summer.