Reduced Supplies on the Way
UK - By Friday evening supply and demand remained evenly balance whereas at the start of the day it looked as though more contract pigs were likely to be rolled, writes Peter Crichton in his Traffic Lights commentary.
29 November 2008
3 minute read
Several of the larger processors commented that poor retail demand is keeping a lid on prices rather than too many pigs. If more shoppers reach for their purses in the run up to Christmas we could even see a modest price rally.
Most spot bacon quotes were in the 127p region with lighter weight cutters worth a small 4–6p premium, but contract pigs still represent a much more attractive proposition for sellers.
Although the DAPP has continued its quiet decline and now stands at 132.11p, those selling on a DAPP plus 4p contract basis are probably receiving anywhere between 6–8p more than spot equivalents worth an average of 35/pig.
Unfortunately the € has lost some of its recent gains and closed on Friday worth 82.6p down by 2.5pc compared with seven days earlier.
This however had little effect on cull sow quotes which again have tended to be firmer than the previous week more due to a lack of supply than better EU prices.
As a result cull sow base prices were in the 112p/kg region with larger loads worth significant premiums.
But with only three clear trading weeks left between now and Christmas, breeders are advised to keep selling culls before the market virtually shuts down for the two weeks over Christmas and the New Year.
Looking ahead to finished pig prices early in the New Year although January may be a challenging month, a reduction in United Kingdom live pig availability may well filter through to the market by mid February and the general consensus is that we could be looking at a rising demand into the spring.
This view is being reflected by slightly more buoyant weaner prices with demand already exceeding supply and several large scale finishers looking to fill empty units in the weeks ahead.
This improvement in demand has yet to be reflected by the AHDB 30kg ex-farm weaner average which has slipped to 343.19/head, although it is currently difficult to find pigs in this category at much less than 345/head.
As Christmas is a time for giving as well as taking hopefully United Kingdom pig finishers will be taking a fair price in return for all their hard work, rather than the retailers continuing to give them a hammering to protect their margins.
