According to Iain Macdonald, Senior Economics Analyst with QMS, in the second week of December, the GB Standard Pig Price (SPP) price averaged 142.2p/kg dwt, leaving it 5.5 percent below its summer peak of 150.47p/kg and 5.8 percent below its year earlier level.

However, the average weekly fall since mid-July has been 0.38p/kg this year compared to a 0.69p/kg average decline from the summer peak in 2017.

"Influencing the seasonal downturn in prices from the supply side have been slaughter numbers and carcase weights," said Mr Macdonald.

"At price reporting abattoirs, the five weeks to 15 December saw five of their six largest processing weeks of 2018.

"The average weekly kill over this period was 8 percent above the average for the year-to-date, and 11.4 percent above the 2018 low point between May and July.

"In addition, while carcase weights have eased back by a kilo since mid-November, at 83.8kg, they remained well above their 2018-average.

"As a result, in the five weeks to mid-December, pigmeat production at reporting abattoirs exceeded the 2018-to-date average by 8.8 percent and was up 13.3 percent from May-to-July levels."

With carcase weights running higher than 2017 in recent weeks, the average price paid per carcase has shown a smaller rate of year-on-year decline than per kilo prices.

At £119.19 in the second week of December, the average carcase price traded at a 4 percent year-on-year discount.

However, according to Mr Macdonald, seasonal changes in production do not fully explain why market prices have continued to run behind 2017 levels.

"Defra’s latest quarterly estimates of UK meat supplies not only indicate year-on-year growth in domestic production, but also an increase in net imports.

"This was the result of a 2.1 percent rise in imports, while a 2.9 percent reduction in export volumes left more pigmeat on the home market," said Mr Macdonald.

“Home production was boosted by an increased number of fattening pigs on UK farms, with the June census reporting 1.1 percent growth.

Monthly slaughter statistics also pointed to a significant rise in sow slaughter.

"Meanwhile, the rise in imports and fall in exports will have largely reflected a well-supplied EU market," commented Mr Macdonald.

The May/June census results reported an increased fattening pig population in the EU, while demand from the important Chinese market has fallen and there has been a more competitive global market due to the US and Brazil showing significant rates of production growth this autumn.

Looking forward to 2019, there are some signs that the recent production growth in the UK and on the continent may not last.

While there were increased fattening pig populations living on farms in the summer, breeding herds at UK and EU levels showed small declines.

However, the USDA has forecast further expansion in pigmeat production outside of Europe, so UK and EU exports are likely to continue facing strong competition on the global market.

"Given that the UK is only around 60 percent self-sufficient in pigmeat, with imports accounting for more than half of consumption and one-sixth of domestic production being exported, political developments could have a considerable impact on the market in 2019," said Mr Macdonald.

"If the Withdrawal Agreement receives the consent of the UK and EU Parliament’s, trade should continue to flow freely, but there is likely to be some strengthening of sterling in this scenario.

"By contrast, the outcome of a no deal scenario would be highly uncertain."

According to Mr Macdonald, latest government guidance for a no deal scenario suggests that imports to the UK from the EU would be treated the same as now to ensure a smooth transition.

However, exports to the EU would be on hold until the UK is listed by the EU as an approved country to import from, with tariffs and official control measures being enforced once this listing process has been completed.