June - Market Report - GCL Food Ingredients

Protein

Chinese authorities have confirmed an outbreak of highly pathogenic avian influenza virus, H5N6. Authorities have culled over 10,000 birds in the area in a bid to stop the disease from spreading further.
This may mean that UK Chicken prices are set to increase in the next quarter.

UK pig meat production grew by 3.7% in May to total 80,100 tonnes. This has been driven by an increase in clean pig slaughters and heavier carcase weights compared to year on year.
The current African Swine fever epidemic is expected to reduce China’s pork production by 25 -35%. This means an increased demand for other animal proteins but decreased demand for feed.

A recent study from Defra shows that lamb and sheep kill continues to be elevated. This is due to the fair weather we’ve had at the beginning of June/late May.
In the last 30 years, the USA annual domestic production of sheep meat has almost halved to around 70,000 tonnes according to USDA data. Data in the first four months of 2019 is similar to year-earlier levels. During the first four months of 2019, the US has imported over 43,600 tonnes of fresh and frozen products up 7% year on year. Lamb is starting to make an appearance in quick service restaurants, although remains mainly associated with fine dining. This may provide an opportunity for UK lamb if successful trade negotiations take place.

UK beef and veal products in May totalled 79,300 per heard up 2% compared to the year earlier. This was mainly due to slightly heavier prime carcase weights and slightly higher cow slaughterings.
The African Swine flu is causing a growing demand for alternative protein sources than pork. Chinese beef and offal imports have increased by 47% compared to last year. Higher beef prices could continue giving Chinese dairy produces a price incentive to focus on beef production rather than milk. This would restrain milk production opening the door for increased dairy imports.

The cost of tax relief claimed through Small Breweries Relief (SBR) has increased just 9% over the last five years to £60 million in 2018 -2019, up from £55 million in 2014- 2015.
430 new breweries opened in the UK in 2017. During the year ending March 2018, craft beer sales grew by 90% compared to a 1.3% decrease in sales of big brand lagers.
In addition, the UK craft beer market has seen a huge growth in cans and no and low -alcoholic beers. In the last two years, the market has grown by 38% with nearly 2.5% of all craft beer sold being 2.8% and below and 1.2% of all craft beer being no more than 0.5% strength.

In the first week, of June over 5,000 farmers protested in the Spanish city of Jaen calling for officials to introduce measures that would aid price increases.
Some regions of Spain are encouraging producers not to sell at the moment and stockpile their oils until prices go up.

African swine flu may lead to an increase in dairy cow culling which could restrain China’s milk production growth during the year – lifting demand for dairy product imports.
Counterbalancing any rise in import demand for dairy products will be a drop in China’s imports for feed products such as whey. Whey powder imports were down 16% which is having a negative impact on the global price of feed.

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