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All Eyes are On the Euro

by 5m Editor
23 January 2010, at 8:39am

UK - Something of a two-tier trade today with demand led by the larger abattoirs who are significant suppliers to the supermarket trade, with the smaller fresh meat wholesalers claiming that pigs were harder to shift with shorter queues in butcher shops and consumers probably counting their pennies now their post-Christmas credit cards have come home to roost, according to Peter Crichton.

As a result spot bacon quotes from some of the larger players were in the 140p region with a copper or two more in places where they were short of stock, but some of the smaller players were trying to buy at less than this figure, although by the end of the day most pigs were at or close to 140p but with significant premiums available for lighter weights and gilts.

Contract and spot prices are now almost level-pegging with DAPP-plus-4p working out at 142.7p, but a deafening silence from those buyers who until recently were complaining that the DAPP was “unrealistic“.

The most negative factor facing the market at the moment is the strength of the pound, especially mid-week which drove the euro to below 87p, but this has since recovered to close on Friday worth 87.7p, but still down from its seven-day fix of 88.4p the previous week.

Meat traders and smaller wholesalers are also commenting on larger volumes of Spanish and Belgium carcasses that are challenging the home market at a bargain basement 132p/kg delivered, which after slaughtering costs are 15p cheaper than their British counterparts.

Notwithstanding this however, thanks to the hard work put in by NPA and BPEX, retailers are becoming much more aware of the need to increase the proportions of welfare-friendly British pigmeat with excellent backing for the domestic product from Waitrose, M&S, Morrisons (who are expanding their kill), the Co-Op and Somerfield to name but a few.

European pig farmers are receiving in the region of 110–115p/kg for their pigs, which makes them a potent threat in the marketplace and any recovery in the value of the euro would bring smiles to British sellers’ faces.

The cull sow market remains a ready barometer of exchange rates as well as European pigmeat prices, which once again lost ground mainly due to the fall in the euro, with quotes as low as 90p heard for small lots of sows, but mainstay bids tended to be in the 93–95p range.

There is however a growing shortage of British finished pigs ahead and this is further flagged up by very tight availability with falling weaner supplies and rising demand and as a result the AHDB 30kg ex-farm weaner average has now risen above the 350/head threshold to 350.40/head with premiums available for large bunches from known sources.

Another shaft of sunlight emerged in the commodity sector where feed wheat prices have eased significantly with the latest ex-farm feed wheat quotes as low as 393/tonne and providing additional opportunities for forward thinking pig producers to lock into feed futures at a fairly low level while large holdover stocks are available.