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Feed Price Up, Pig Price Down

by 5m Editor
24 August 2010, at 8:24am

UK - "Apologies for the first ever late delivery of my commentary. Due to the need to close a big pig industry related deal on Friday and my secretary having her one day's annual holiday I ran out of time to send out anything coherent, but for those of you who missed it here it is..." writes Peter Crichton.

Friday's situation was similar to the case of déjà vu we experienced a year ago towards the end of August and that dreaded (but final) bank holiday of the year.

The DAPP took a further modest downward step and now stands at 144.59p, but for those sellers who are still on DAPP-related contract base prices this represents a much better return than the spot market where bids of between 136–138p were available for heavy bacon, but for lighter weights on a tighter spec 140–142p and the maxim "weight" is money remains the key.

The following comparisons with 2009 however might make slightly uneasy reading for bank managers and are another reason why we should continue to actively promote pigmeat to try and improve margins rather than allowing the retailers to call the tune.

Week ending 22.08.10 2009 2010 % Variance
DAPP 153.65p 144.15p -6.2%
TL Spot Price 140p 138p -1.5%
AHDB weaner av 354.33 348.16 -12%
Euro 86.2p 81.8p -5.2%
Cull sows 112p 98p -12.5%
Feed wheat ex-farm 384/t 3137/t +63%

In simple terms all the revenue index prices shown have gone down and the main cost item (feed) has gone up!

With processors able to buy cheaper imports due to the falling euro, further downward pressure is expected as far as British pig prices are concerned over the next few weeks, but once all the schools are back and the holiday season is well and truly over demand normally improves which might help to put a little bite back into the market, but some processors are suggesting that we may have to be content with returns in the 135p region between now and the end of the year... we shall see.

Although cull sow values are well behind their levels a year ago, this is mainly due to equivalent falls in the value of the euro. Over the last few weeks British prices have if anything edged ahead reflecting competition for market share between United Kingdom abattoirs, rather than any actual improvement in European Union mainland cull sow prices.

Although there are a fairly wide variety of different cull sow quotes available on a flat rate or collected basis and others subject to grade/weight premiums/deductions, most producers were able to negotiate prices of 96p including haulage or up to 100p on a delivered basis.

The weaner market continues to suffer from the twin problems of weaner buyers being preoccupied with harvest/straw carting and a general lack of finishing space in the system, especially for 30kg weaners where there are fewer homes available with more of the large scale buyers now operating a 7kg–110kg systems, which are reported have lower mortality levels as well as reducing haulage costs.

The latest Agriculture and Horticulture Development Board 30kg ex-farm weaner average is quoted at 348.16/head which includes a high proportion of DAPP-related contract prices, whereas the spot weaners had been changing hands at up to 35 below this mainly due to concerns over high feed costs and something of a buyers' market is developing.