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DAPP Hits 137p As Retail Demand Slows for Higher End Cuts

by 5m Editor
1 August 2008, at 6:43pm

UK - There seems to be something of a two-tier trade when comparing demand for cull sows with finished pigs, writes Peter Crichton in this week's Traffic Lights report.

Although the DAPP continues to move ahead and now stands at 137.22p, there was less enthusiasm from spot buyers all of whom are complaining of slow retail demand with the rear end of the pig (the expensive part) much harder to sell than the cheaper front bit.

This may to some extent be a reflection of how the effects of the credit crunch are starting to be felt in the retail sector with consumers moving downmarket to save money on household bills.

The recent hot spell has boosted barbeque demand, but forecasts of more unsettled weather ahead will do nothing to help.

Contract sellers at DAPP + 4p will now be receiving base prices at just over 141p, but spot quotes are lagging 4p–6p behind this which once again underlines the value of a DAPP-related finished pig contract as against the volatility of the spot market.

Although cutters continue to earn a modest premium of 4p–6p above spot bacon, it was quite hard to get much beyond 140p even at the lighter end of the weight range with most heavy bacon quotes in the 135p region.

The cull sow market on the other hand continues to soar and the 120p that a few weeks ago seemed an impossible target has now been exceeded with most export buyers offering 120p-plus and larger loads worth significant premiums above this due to falling numbers throughout the EU.

With the anniversary of the 2007 foot and mouth outbreak approaching, it is hard to believe that cull sow quotes a year ago only averaged 66.7p and have almost doubled over the past twelve months and during the dark days of the export ban dropped as low as 35p.

Although most of the British herd clearances have now been completed, high cull sow prices may have benefits as they are now higher than gilt replacement costs and shrewd breeders might be able to "sell one and buy 1.5 free".

With falling feed prices and the prospects of a significant finished pig shortage this autumn, weaners are looking a more attractive proposition, although the AHDB 30kg ex farm average of £43.04/head still has some catching up to do with current trades which have generally been in the £45 – $47/head range.

5m Editor