The increase of producer pig prices on the European continent may have a positive effect on farm gate returns in Ireland, says Bord Bia pigmeat manager Peter Duggan. Also, current exchange rates make Irish pork more competitive.
In Germany, the producer pig prices have increased over the past few weeks. This would indicate that supplies are starting to tighten in Germany. The June 2014 census confirmed a 1% increase in the German breeding herd. However, the comparable figure for November indicated that sow numbers had stabilised, according to Duggan.
EU pig farmers starting to destock
"This would indicate that EU pig farmers are starting to destock, which should move the overall supply demand equation more firmly in the direction of stronger market conditions." More good news for the Irish pig industry - and the prices - comes from an ongoing growth in pork export sales to China and other Asian countries, including Japan. "Last year we exported 9,000 tons of pork to Japan, up from 2,000 tons a couple of years ago. But what makes Japan important is the fact that belly pork accounted for the vast bulk of this business. This is the very high end of the Japanese pigmeat market."
Russia's ban on EU food imports
In the mean time, Russia's ban on EU food imports could end without warning, which could also affect pig prices in Ireland. Duggan: "This remains a complex issue. There was speculation some weeks back that individual countries, including France and Germany, were prepared to sort out their own trade deals with Moscow. But this came to nothing. Overarching the trade embargo issue is Russia's refusal to accept EU pork imports on swine fever grounds. However, efforts are being made to have this issue addressed on a regional issue. Ireland, for example, is free of the disease."
The weakening euro also has an impact on the export of pork from Ireland to the UK and is making Irish pork more competitive, however it will take a number of weeks before the full impact of the exchange rates becomes clear.
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