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Prices Return from Recent Higher Peaks

by 5m Editor
16 August 2008, at 9:54am

UK - Looking back it may be supposed that if at the start if the year any producers had been offered 134p for bacon in mid August they would have jumped at the opportunity, writes Peter Crichton in his Traffic Lights Commentary.

Since then although prices have come back from recent higher peaks of 140p plus, demand has suffered the inevitable mid August blues that often afflict the trade. Constant references to the upcoming Bank Holiday making it sound more like a month long Ramadan type fast as far as the consumption of pigmeat is concerned.

The GB Euro DAPP took a slight downward step this week from 137.38p to 136.85p that turned to be 1 – 2p below equivalent spot quotes which (where space was available) was in a very narrow 134 – 135p range.

With the inclement weather continuing barbeque demand remains limited and fresh meat wholesalers are also complaining of general poor retail uptake which has not helped on the price front.

Lighter cutters were changing hands in the 140p range and the general feeling in the trade is that once EU pigmeat demand picks up and supplies drop in the autumn, this will filter through to the UK market and we will see a much more positive upturn.

EU cull sow prices have remained at similar levels, although falling UK volumes are continuing to put upward pressure on prices with the result cull base prices of circa 126p were commonplace with premiums available for larger loads and export abattoirs are looking to maintain their throughputs at a time when supplies are continuing to shrink.

The weaner market remains firm reflecting some reductions in forward feed prices (see below) with the AHDB 30kg ex farm average quoted at £42.63/head which is still some £3 - £5 adrift of recent trades.

With unsettled weather playing havoc in the harvest field, the spot feed wheat prices are currently varying by up to £20/tonne according to region and availability with some producers living on a hand to mouth basis whereas others have now got enough in the barn to start mill and mixing again.

In those regions where very little wheat has yet been cut, ex farm prices of up to £140/tonne have been quoted, but as soon as the combines really start rolling these are expected to fall sharply and this trend is reflected by forward prices with November wheat ex farm traded at circa £127/tonne.

Soya prices are also painting a more favourable picture at circa £240/tonne due to the current $ exchange rate, but other ingredients still remain expensive with finishing rations costing over £180/tonne to make.

Threats of more supermarket “price wars” are to some extent unsettling the market with producers fearing a long tussle with retailers this autumn at a time when many are still operating at barely more than cost of production levels.

5m Editor