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Think Carefully Before Expanding

by 5m Editor
4 September 2010, at 5:57am

UK - A rather underwhelming day for pig sellers and although the schools and factories are now open again, no real signs have yet emerged of any significant upturn in demand, writes Peter Crichton in this week's Traffic Lights commentary.

Retailers are still complaining of poor demand and if perhaps the industry were prepared to back Jimmy Butler's proposed promotional levy, this could help at a time when margins are shrinking.

The DAPP has continued its steady downward track and now stands at 142.87p and the Tulip shout price also slipped a penny to 141p.

With reports of extra numbers of slaughter pigs available with lower mortality, better productivity and some producers (perhaps unwisely) expanding, there were more than enough pigs to go round with quotes as low as 135p/kg at the commodity end of the spot market with other quotes tending to be circa 136p/kg.

A very slight improvement in the value of the euro which closed on Friday worth 83.3p helped cull sow prices to stand-on at a time when European values are reported to be falling. Shrewd sellers with large loads of sows to sell were generally able to negotiate prices of between 100–103p and 98p was widely available for delivery to collection centres.

Demand for weaners remains fickle with very little space available for spot loads with several finishers being more preoccupied with carting bales of straw than buying pigs and also wondering how good (or bad) the demand for finished pigs is likely to be in the run up to Christmas.

The latest Agriculture and Horticulture Development Board 30kg ex-farm average remains almost unchanged at 347.39/head, but non-farm assured weaners have proved to be hard to place.

Producers were also dismayed to hear that the Gills abattoir had apparently shut its lorry wash this week. Hopefully this will be only a temporary measure, but it greatly increases the risk of the spread of disease including dysentery, especially during the warmer weather when pig muck can effectively be oven-baked in livestock containers and very hard to shift afterwards without a chisel, a Brillo pad and a pair of Marigolds.

On the numbers front, before expanding their herds, producers should be reminded of the very fine supply/demand balance within the British retail sector to absorb extra supplies of potentially more expensive British pigmeat in the face of cheaper foreign competition.

The last thing many of us would wish to see is a return to the oversupply situation we saw ten years ago and the long-term damage that caused to the industry as a whole.