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Prices Could Get Better Quickly

29 January 2013

UK - Another disappointing day for sellers especially in the spot sector, although signs are starting to emerge that pig numbers are tightening and prices could soon be on the upturn, writes Peter Crichton in his latest Traffic Lights commentary.

Although the DAPP eased back only a shade falling, by 0.58p, with the exception of Tulip which thankfully stood-on, the other major shout price abattoirs dropped their prices by 2p/kg, so the league table now reads as follows:

158p Woodhead
154p Gill
153p Vion
153p Cranswick.

The spot market seems to have borne the brunt of the much sharper price falls on the wholesale markets caused by a continuous stream of cheaper imported pig meat with regular spot pigs in the 145p–150p region.

But one-off lots were low as 140p and reports of yet more European Union carcasses hitting these shores ex-head and feet at around 160p/kg, mean British abattoirs would have to buy pigs locally at no more than around 140p/kg to compete at this level.

However some positive signs are staring to appear including a much firmer euro which has risen by 1.75 per cent in value over the past seven days and traded on Friday worth 85.18p. Pig availability is also starting to tighten with no reports of pigs being rolled and the cold weather is also slowing down growth rates.

An improvement in demand would work wonders especially while supplies are tight and trade could easily turn around within a fairly short space of time, but until then hard-pressed producers have got to continue to grit their teeth and bear it.

The improvement in the value of euro and slightly better continental demand was reflected in the cull sow market where prices moved ahead by 3p/kg and on a delivered basis sows were generally traded between 95p–97p/kg.

Weaner supplies remain fairly tight which should perhaps help to nudge their prices ahead with the latest AHDB 30kg ex-farm average quoted at £46.33/head and any recovery in finished pig prices should soon filter through to the weaner market.

Cereal prices remain firm but far too expensive to feed to pigs with March wheat quoted on the LIFFE market at £213/t and July at £215/t and according to BPEX producers still need in the region of 175p/kg deadweight to start earning a margin which seems a long way off at present. Perhaps more producers will be interested in signing up to the Tesco initiative to source pigs on a CoP basis? If so that would certainly put the pressure on the other processors, especially with weekly shout prices at their current levels.

Trafficlights Peter Crichton

ThePigSite News Desk

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