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Spot Prices Continue to Climb

by 5m Editor
21 March 2009, at 10:35am

UK - Don’t ring us, we’ll ring you.... and they did, starting as early as Wednesday this week with buyers wanting to get their names on to scarce supplies as soon as possible, writes Peter Crichton this week.

As a result and reflecting further rises in the DAPP which now stands at 141.6p, spot prices are continuing to climb and with very few exceptions most bids were at or above 150p/kg.

But there is still a fairly wide difference between abattoir killing out and net returns and so the saying that the “highest are the lowest” still comes into play with some outlets, but for comparison purposes producers should ideally bulk weigh their pigs when they leave the farm and divide the weight into the cheque which tells them everything they really need to know.

The smaller fresh meat plants still seem to be struggling to keep up with the big bacon boys and quotes for heavy pigs of 150–154p are in some cases higher than the smaller buyers felt they could afford even for lighter pigs, so premiums for porkers and cutters remain fairly slim.

There are a number of reasons for the current price rally with one of the main factors being very much lower live pig availability throughout the United Kingdom coupled with the afterglow of the Jamie Oliver programme and further improvements in the value of the euro, which closed on Friday worth 94p compared with 92p a week earlier.

A glance at the calendar reveals however that Easter is only three weeks away, but with universal pig shortages in the United Kingdom and abroad hopefully the two dreaded Easter short weeks will have much less of a downward pull on the market than usual.

Further weakness in the strength of sterling in the currency market also has a direct influence on cull sow quotes.

Faced with falling numbers, firmer European Union prices and a currency advantage, most cull sow abattoirs were prepared to lift their bids by 2–3p compared with last week and 120p/kg now represents a realistic base price with the usual premiums available for larger loads.

If this trend continues we could see cull sow prices nudging the 130p mark in a few weeks time.

But several producers have commented we should not get too carried away with current price levels which although they are to be welcomed, in real terms are well below those earned in 1996. A victim of the pig price slump after 1997 was quick to remind me we need several more years of this to even put us back to zero, let alone in the black.

An ongoing shortage of weaner availability is reflected by continuing rises in weaner prices with the AHDB 30kg ex-farm weaner average still on the move and quoted at £50.69/head, but well behind recent spot trade, some of which are nudging up towards the £60/head mark.

Providing that finished pig returns do not collapse, finishers should still be able to earn a margin on weaners brought at current prices, but in just over three months time it will be mid summer when trade is often unsettled by the Wimbledon/strawberry/ice cream scenario.

There are also rumbles that further abattoir mergers/closures may be on the cards and this will be a serious blow to the still shrinking UK pig industry, which now only accounts for just over 3 percent of the European Union total.

It would be most unfortunate if those retailers including Morrisons, Waitrose and the Co-Op who have been such loyal supporters of United Kingdom pigmeat should run out of stock and be forced to look abroad for replacement supplies.