Processors Getting Sniffy about DAPP Contracts

by 5m Editor
11 July 2009, at 8:31am

UK - Although DAPP continues to rise and has now hit a new high of 155.7p, the spot market has become more fragile mainly due to indifferent demand and the reluctance of any of the big players to venture into the spot market with more than enough contract pigs available, writes Peter Crichton.

The recent unsettled weather has done nothing to help demand for beef and lamb as well as pork and the wide gap between the cost of imported pigmeat and the (superior) home produced product is also undercutting domestic demand.

As a result spot bacon quotes tended to be in 150–154p according to specification, but with relatively few takers, whereas contract sellers on DAPP-plus-4p contracts are receiving almost 160p/kg and smiling all the way to the bank.

However all good things come to an end and there are signs of further resistance to DAPP-related contracts in the market, although I am sure in the autumn if spot moves ahead of DAPP all of a sudden the DAPP will be in favour again.

Cull sow prices remain firm with the euro a shade dearer closing on Friday worth 86p and most export abattoirs were offering 110–114p according to specification.

Cull sow exporters are still short of numbers which is why United Kingdom prices have remained significantly higher than delivered values in mainland Europe where exports to Russia remain under pressure and processors continue to find it hard to earn any margin.

Weaner prices also appear to have hit something of a plateau (but a pretty high one) with the latest AHDB 30kg ex-farm weaner average now quoted at 357.53/head with some northern buyers still prepared to pay towards 360 for a good quality 30kg pig.

The debate over potential health risks posed by imported weaners continues.

This comes at a time when Defra and the government are seeking to avoid further liability if the livestock industry is hit by exotic disease outbreaks and on the polluter-pays principle suggestions are emerging that any finishers who decide to import weaners should face the financial consequences or take out insurance cover if this leads to any major disease outbreaks.

There are also reports of some heath-sensitive producers suggesting that if commercial weaner pigs start to flow in this direction some form of militant action/blockades might be the answer and it will certainly be hard for some abattoirs to satisfy their retail customers over the source of any pigs they sell as these will not be eligible for the Quality Standard Mark and may also breach farm assurance rules.