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Pig Price Rally Peters Out

29 October 2012

UK - Unfortunately following easing mainland Europe pigmeat values the British pig price rally which has seen the DAPP move up from 140p in mid February to 157.99p today, appears to have stalled.

Although most sellers would welcome an improvement of almost 18p/kg over the period in question, cereal prices have also continued to push ahead with the result that producers' margins are still in the red and remain under pressure.

The European pig price situation was flagged up by Tulip's decision to leave its weekly shout price unchanged at 159p and all of the other major shout price buyers followed suit with the result that the price league table remains as follows:

163p Woodhead
160p Gill
159p Tulip
159p Vion
158p Cranswick

Spot buyers were also operating at similar levels to last week, although one or two indicated that if more pigs had been offered to them they might have cut the price back, which was fortunately not the case, and most spot bacon was traded between 160p and 163p/kg with the odd copper or two more available in places, but generally on a tighter spec or for lighter weights.

A glance at the calendar reveals that there are only 40 slaughtering days between now and Christmas which this year falls on a Tuesday effectively disrupting much of that week as far as slaughtering is concerned.

To avoid the usual Christmas pig roll-over effect producers are advised to sell as many pigs as they possibly can in the run up to the festive season, even if this means dropping slaughter weights down to around 70kg, because this will have the effect of shortening supplies in January, which can also be a tricky marketing month.

This will mean that less weight is put onto the market for which a higher price is paid as well as preserving scarce and valuable feedstocks, especially for those producers who were wise enough to buy their feed on a forward basis at more advantageous rates.

The value of the euro remains a key factor in determining pigmeat prices throughout Europe and it was disappointing to see that over the past week the euro has slipped from 81.27p to trade at 80.35p on Friday, a reduction of 1.25 percent over the week.

As a result cull sow quotes moved down by between 1p–2p/kg with reports of plenty of sows still in the system due to a mixture of more herds clearing out as well as producers being much harder in their culling policy. Cull sow quotes from the big three abattoirs were generally between 114p and 117p according to load size and specification on a delivered basis.

Weaner prices continue to improve but are still lagging behind cost of production levels with the latest AHDB 30kg ex-farm weaner average now quoted at £42.29p/head, but a distinct shortage of spot weaners looking for homes with most being sold under contract, which is a refreshing change from the situation three months ago as far as sellers are concerned.

On a more positive note abattoir operators are all keen to source contracted pig suppliers from March 2013 onwards when something of a black hole will be opening up in the worldwide pig supply chain.

On an international basis the Canadian pig herd is reported to have fallen by 50,000 sows, and even bigger falls have been seen in the United States where earlier this year pigmeat market prices dropped to 45c/lb compared with a CoP of 76c/lb. Since then however the gap has narrowed with pork now worth 64c/lb compared with a 72c/lb CoP at a time when pork cold stores are reportedly bulging, but when these start to empty a shortage of fresh pigmeat in the international supply chain is expected to occur and should put those producers who have been able to stay afloat back into the black on a worldwide basis.

Trafficlights Peter Crichton

ThePigSite News Desk

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