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Despite Long Weekend, Prices Remain Firm

by 5m Editor
27 December 2008, at 7:06am

UK - Very much of an end of term feeling for pig traders as most contract buyers had already sorted out their numbers for next week, writes Peter Crichton in his Traffic Lights commentary.

The DAPP took a welcome upward step at the end of the year rising from 130.84p to 131.16p and also put an end to its gradual decline from a high of 137.38p in early August.

Demand for spot pigs was on something of a hand to mouth basis with a long weekend ahead processors were only really prepared to buy those pigs that they felt confident of selling, but despite this with numbers of the tight side prices remained generally firm with spot bacon quotes in the 133p region.

Lighter pigs continue to attract more interest with bids of 140p+ available from some outlets and this sector may well prove to be something of a trailblazer next year in an attempt to pull lighter weights away from bacon contracts.

Because of the European holiday there was very little activity in the cull sow market, but most reports were of bids at stand on levels in the 114 – 116p region helped by the strength of the € which was worth a remarkable 95p on Wednesday compared with 72.5p a year ago which is an increase of just over 30 per cent.

Providing that the 3 stays under pressure, EU pigmeat imports will remain artificially expensive which provides United Kingdom producers with a realistic guaranteed “base price“ in the year ahead.

Weaner prices are continuing to show early signs of an upcoming shortage of pigs in the system and it is hard to buy any 30kg pigs at much less than 345/head.

One word of caution extends to those producers who have not yet fixed their forward feed buying because a number of grain traders are reporting there is much more upside in the feed market than before with the spot quotes for feed wheat now nudging the 390/t barrier and forward prices could easily move ahead, especially due to the currency situation.

On the negative side further abattoir closures may be on the cards as numbers shrink next year.

Looking ahead “Mystic Pete“ is predicting spot quotes of 140p plus in March with the possibility of higher prices to follow, but in real terms UK pigmeat still provides consumers with an affordable, cheap welfare friendly product.

A Happy Christmas and a Profitable New Year to all readers!