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Tulip Drops Contract Base Price

03 January 2012

UK - Although at Christmas signs were emerging that supply and demand were in balance as well as a relatively firm DAPP which closed this week almost unchanged at 147.63p, Tulip dropped its contract base price from 146p to 143p and all of the other major players followed suit pulling 3p off their prices apart from a more benign Vion which fell only 2p leaving Cranswick in last place, writes Peter Crichton in his Traffic Lights commentary for 30 December.

The end of the year league table now reads as follows:

  1. 145p Gill and Woodhead.
  2. 143p Tulip.
  3. 142p Vion.
  4. Last 141p Cranswick.

According to some of the larger abattoirs the reason for the price drop was that retail demand has been fickle with lower volumes of pigmeat being cleared not helped by the current Tesco v Asda price war. As a result spot bacon fell in sympathy with contract prices and traded anywhere between 140–147p according to region and specification.

It will be interesting to see if retail prices fall by a similar amount or if once again everyone else in the supply chain will preserve their margins apart from the producer without whom we would all be out of business.

Demand in the fresh meat sector was also reported to be quiet and lighter weight pigs are only worth a modest 4–6p above bacon.

Euro watchers have seen this key currency move within a narrow 83.3–84p price range all week but any further falls would be bad news for the United Kingdom industry as a whole although it is worth remembering that at the start of 2011 the euro was also traded at similar levels.

Cull sow quotes for w/c 2/1/12 have eased a shade with export abattoirs bidding around the 112–115p level according to spec but still plenty of competition between the three main export abattoirs as well as relatively firm European Union mainland pigmeat prices.

Much more of a sellers' market is emerging in the weaner sector especially for 7kg pigs which will be baconers in 4-5 months time when most pundits believe pigmeat demand and prices will have improved. The latest Agriculture and Horticulture Development Board weaner price is £44.12, up from £41.69 at the start of the year and as supplies tighten there are forecasts of further price rises in the months ahead.

Unfortunately the long decline in cereal prices appears to have bottomed out with LIFFE wheat quotes for January at £151.50 and July £154.75 but certainly much more positive from the pig producers' point of view than a year ago when ex-farm wheat was trading at an eye watering £194/tonne.

And finally let us hope when we all meet up at the 15-16 May Pig Fair the whole COP and pig price picture will be brighter than it is now.

Trafficlights Peter Crichton

ThePigSite News Desk

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