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Stage is Set for Firm Demand This Spring

by 5m Editor
18 January 2010, at 2:14pm

UK - The DAPP is holding up well, writes Peter Crichton in this week's Traffic Lights commentary.

No fireworks, but a very satisfactory trading day at a time of year that sellers normally dread. And with the DAPP holding up well at 138.29p (compared with 130.5p a year ago) the stage is set for firm demand this spring.

Probably the only fly in the oinkment is in the currency market where the pound has mysteriously gained further in value, with the Euro traded on Friday worth 88.4p compared with 89.6p a week ago and a whopping 94.4p in the third week of January 2009.

As a result, cheap imports are posing more of a threat and reports are already being received of Spanish carcass meat hitting British markets at a significant discount.

Some of the smaller fresh-meat wholesalers were also complaining the trade was slow and as a result there was very little price differentiation between the weight ranges.

Most spot bacon quotes from the bigger boys were at 140p or more and very few cases of pigs being sold at under this.

Cull sow prices have yet to wake up from their Christmas slumber and are over 20p behind their level a year ago, not helped by the recent strength of the pound.

Although the recent Arctic weather has slowed down the flow of culls especially from outdoor units, now that the thaw has arrived supplies are getting back to more normal levels with most export abattoirs holding their prices at stand-on levels with 95p an almost universal benchmark price with the usual premiums available in some quarters for bigger loads.

The weaner market, on the other hand, is continuing to improve, reflecting sharp falls in availability due to infertility problems last autumn as well as additional losses caused by the recent cold weather.

Looking ahead, conception rates will also have been challenged especially on outdoor units and all signs are that there is going to be something of a black hole in the weaner supply chain in the months ahead.

Although the AHDB 30kg weaner average is generally slow to react, this has now risen to £49.85 per head, with further rises in the pipeline especially as the DAPP starts to rise.

The pigmeat/feed price equation is also looking fairly good at present with reports of fairly high 2009 stocks of feed wheat still on farms and ex-farm prices at only £100 per tonne and representing good value to the pig industry as a whole.

If the current cold weather continues, there is a risk that the value of straw will exceed the price of grain on a per-tonne basis!