According to the latest analysis by Quality Meat Scotland (QMS), industry sources suggest that spot pig producer prices have opened last year’s contract levels, signalling that the availability of pigs for slaughter is running ahead of the quantity required by processors.

Nevertheless, due to previous gains, producers were still paid an average of 32 per cent more per kilo than in early February 2016.

With carcase weights opening 2017 at similar levels to early 2016, at just over 84kg, the average price for a carcase was also up 32 per cent year-on-year, at £126.33.

“When considering the factors influencing the market, it is important to think seasonally,” said Iain MacDonald, Senior Economics Analyst.

“Traditionally, farmgate pig prices have cooled in the early part of the year and a commonly held belief is that this can be explained by consumers cutting back on spending and meat consumption after the excesses of the festive period.

“However, Kantar Worldpanel data suggests the opposite,” he added.

Between 2012 and 2016, the average pork sales volume during the early January to early February period was 16 per cent higher than in the four-week period ending just after New Year.

Furthermore, the four weeks to early February was the annual peak period for pork sales in 2014, 2015 and 2016.

“Perhaps then, pork is a beneficiary of a post-Christmas change in consumer spending patterns, with many cost-conscious households switching towards cheaper proteins,” added Mr Macdonald.

In contrast to this apparent lift in demand for fresh and frozen cuts of pork at the beginning of the year, the number of prime pigs handled by SPP price reporting abattoirs shows a reduction.

“The three-week rolling average for the SPP sample size was 9 per cent lower at the week ending February 4 than it had been in the week ending 17 December,” said Mr Macdonald.

“UK slaughter statistics also show a decline in the average weekly kill between December and January in most years, averaging 3 per cent over the past decade.”

The data suggests that pork consumption typically makes a strong start to the year but that abattoir throughput declines.

Basic economics suggests that this combination would place upwards pressure on producer prices. However, in practice, they tend to fall back.

Over the past five years, prices have averaged 2 per cent lower in January than in the preceding month.

“One potential supply-side explanation could be that a lag between slaughtering and retail sales means that the rise in pig slaughter in the run up to Christmas is used to fulfil orders at the beginning of the year,” said Mr Macdonald.

“Carcase weights may also be at play with prime pigs tending to be slaughtered at slightly younger ages and lighter weights in December, due to the concentration of slaughtering in the early part of the month before the holiday season disrupts production.”

According to Mr Macdonald, in January the opposite tends to happen, with delayed slaughter boosting carcase weights.

Accounting for this, prime pig meat production is more stable between December and January than slaughterings; though it was still slightly lower in January between 2014 and 2016.

Trade volumes also need consideration, with the UK only 62 per cent self-sufficient in pig meat, imports account for a significant proportion of pig meat supply.

“Evidence from HMRC trade data points to a higher volume of imports during December than in the following January, averaging 13 per cent higher over a five-year period,” commented Mr Macdonald.

“Although exports tend to be slightly higher in January than in December, net trade still adds significantly more supply to the UK market in December than during January, averaging 37,600t in December compared with 31,500t in January.

“Though, like with domestic production, there may be a lag between pig meat arriving in the UK and moving through the supply chain,” he added.

Looking at the wider European pig market, farmgate prices also tend to cool in January.

“This year the EU average for Grade E pigs closed January at €1.52/kg dwt (£1.30/kg), down 2.5 per cent from their seasonal peak in mid-December,” said Mr Macdonald.

“Most major producing nations saw declines of 2-6 per cent over this period with France and Spain the exceptions, showing increases of 0.5 per cent.

“Like in the UK, the EU average was well above year earlier levels, showing an 18 per cent increase,” added Mr Macdonald.