Processors Stand Firm as Feed, Pig Price Gap Widens

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Processors Stand Firm as Feed, Pig Price Gap Widens

20 August 2012

UK - Another disappointing day for sellers in view of the ever-widening gap between feed costs and pig prices and the retailers seem to have their foot firmly on the throat of the British pig industry at present, writes Peter Crichton.

However there are signs that one or two of the more enlightened supermarkets might be prepared to follow the lead set in the dairy sector by upping their prices in the weeks ahead, but this could still be a case of too-little-too-late, even though as we well know, every little helps and very little hurts,

With the DAPP remaining almost static at 150.43p, it was no surprise that Tulip decided to stand-on and all the others followed suit with the result that the batting order remains as follows:

152p Woodhead
150p Gill
149p Tulip
147p Cranswick and Vion

The spot market remains subdued with prices drifting down by 1p–2p, although 150p was achievable for light bacon on a tighter spec and 148p proved to be the norm for heavy bacon.

Despite the much better weather, smaller fresh meat wholesalers reported another quiet week and although one commented in a delightful mixed metaphor that "legs were quickly changing hands", the loin remains the harder (and one of the most valuable) bits of the pig to sell.

The euro has remained in the doldrums all week and traded on Friday at 78.46p which is exactly the same as it was worth a week ago, although this time last year it was worth 87.57p giving imports a 12 percent advantage.

Signs are emerging however of better European pigmeat prices which have improved steadily since early July, more due to reduced live pig availability than better demand.

This improvement also featured in the cull sow market where despite a lacklustre euro export abattoirs were keen for the larger numbers now available as some producers clear out, with quotes generally in the 112p–115p range according to specification and load size.

Weaner producers continued to be hammered by high feed prices, with reports of very poor bushel weights and grain quality now that the British wheat harvest is underway between the showers doing nothing to help as far as local availability is concerned, with ex-farm feed wheat quoted at over £185/tonne and futures prices are painting an expensive picture with LIFFE quotes for November at £200/tonne rising to £206/tonne next July.

With soya trading at over £430/tonne and rape in the mid £350/tonne area there is no hiding place for producers looking to keep a cap on CoP levels.

As a result weaner prices are continuing to tumble with the latest AHDB 30kg ex-farm weaner average quoted at just £39.27/head and space very hard to find with some buyers reluctant to commit themselves until they have a better idea of finished pig margins and feed costs in the weeks ahead.

But it has to be remembered that without the primary producer there would be no supply chain and unless we see a rapid recovery in pig prices more producers will be forced to head for the exit door in the months ahead, especially if their not-so-friendly bank managers start turning the screw even tighter.