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Spring Supply Shortage to Coincide with Rising Demand

by 5m Editor
11 January 2010, at 8:12am

UK - Although most pig farmers, especially those with outdoor units, are continuing to struggle with the Arctic weather conditions playing havoc with water supplies, conception rates and pre-weaning mortality, the current icy cloud has had something of a silver lining as far as prices are concerned, writes Peter Crichton in this week's Traffic Lights commentary.

For the first time since June spot quotes have nudged ahead of the DAPP which eased a shade this week to close at 138.28p, but all the clever talk is that from next week on the DAPP should start to rise, reflecting better spot demand.

With lamb trading at up to 450p per kg deadweight and cattle nudging the 300p mark, pork is even more of a bargain buy with deadweight quotes in the 140p region, which is only what it was worth at the end of January last year so plenty of scope for further price rises in the months ahead.

Although some spot buyers opened their quotes at around 136p, those who were short of pigs had to keep moving upward with the result that by the end of the day quotes tended to be in the 138 to 142p range according to specification.

The cold snap is already having an effect on the supply chain in the future. This will become much more apparent as we move into the spring when supply shortages coincide with rising retail demand.

Imports however are posing more of a threat to the British market with the European pig industry in very much a glass-half-empty rather than a glass-half-full mode.

With the pound also retaining some of its recent strength and the euro closing worth 89.6p, a rising level of imports may continue to undermine the British market to some extent, although demand for Freedom Food and outdoor-born, high-welfare British pigs remains strong.

The cull sow market continues to provide a more accurate barometer of European Union mainland pig meat prices as a whole with a universal but positive stand-on being quoted today, with weather-related shortages avoiding any further drops in cull sow prices, which have slid a long way from their value of 115p in late August to around 95p today.

Because of the difficult traveling conditions, producers with large numbers of sows were able to obtain premiums of several coppers above this level, but this position may be reversed when/if the thaw appears.

Weaner prices are continuing to harden with the AHDB 30kg ex-farm average now quoted at £49.42 per head and premiums for high-health-jabbed/tail-docked bunches.

With very few finished pigs being rolled or spare supplies in the system, it looks as though (for once) January will remain more of a seller's market than the usual post-Christmas bargain basement sale and demand normally starts to improve once we get into February, which will hopefully be the case again this year.