Frisky Euro, Better Demand

by 5m Editor
13 December 2008, at 7:25am

UK - As Christmas is a time for giving as well as for taking, some spot pig buyers had to give a better a price to get the pigs they needed and non-contract producers were happy to take it, writes Peter Crichton in his Traffic Lights commentary.

Although there was very much of a north/south divide and on this occasion better demand in the south, the overall picture was of a generally better demand due to a very frisky € which on Friday hit 89.6p in value compared with last Friday’s record high of 86.8p.

As a result the cost of imported pigmeat on which the United Kingdom is now over 50 per cent reliant has moved up by a similar amount instantly adding value to the domestic product.

But in view of the latest Tesco “Prime Cuts“ advert showing a half priced pork leg sourced from approved farms in Great Britain, Sweden, Denmark and Holland which also included a prominent Red Tractor mark, how the poor consumer knows where anything comes from is a mystery to all of us in the industry.

Spot quotes today moved ahead by 2–4p despite numbers being pulled forward for Christmas, although one or two of the larger contract abattoirs were absent from the spot market as they had enough supplies on hand.

The cold snap has slowed pig growth rates and with very little spare supply in the market, spot buyers were prepared to bid in excess of 130p/kg in most cases with premiums of 4–6p available for light bacon and on special contracts.

The DAPP eased a shade this week to close at 131.38p, but still represents a realistic contract base price and has almost lined up with spot.

The Irish dioxin in feed bombshell which exploded in the media over the weekend cast a cloud over the whole of the United Kingdom cull sow market as it was hard to persuade European Union cull sow processors that Ireland (the southern bit) was not part of the United Kingdom.

After a couple of days of indecision export containers have started to move again, but despite the rising € cull sow importers were able to cut their delivered prices by up to 8 cents (7p) in some cases.

Some of the drop was absorbed by United Kingdom export abattoirs with the result that most price drops were in the 3–5p/kg region with very few sows traded at less than 112p/kg and larger loads worth 2–4p/kg above this.

Weaner supplies remain on the tight side with private deals reported in the 345- 347/head region on an ex-farm basis and premiums still available for large lots of healthy weaners from regular sources.

As we have now reached the last full trading week before the Christmas/New Year period, at least it is refreshing to note that there are several positive factors at what is normally a gloomy time of year when we look back at December 2007.

DAPP Cull Sow Price Weaner Feed Wheat
(ex farm)
December 2007 110.63p 74.57p 66.6p/kg 331.21/head 3161.00/t
December 2008 131.31p 89.6p 114.0p/kg 343.32/head 388.50/t