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The Big Banks are Very Negative

by 5m Editor
15 November 2010, at 9:26am

UK - Today's main talking point is how producers have once again found themselves between a rock and a hard place with feed prices soaring and finished pig values travelling in the opposite direction, writes Peter Crichton.

Although the DAPP lost another 0.88p and now stands at 136.81p, all the signs were that demand was improving with buyers looking for extra pigs and the stage was set for prices to either stand-on or even nudge up a penny or so.

Unfortunately this proved not to be the case with the Tulip shout price surprisingly dropping to 135p plus 2p LDB and this was then followed by the Cranswick weekly price easing to 136p, although Vion only dropped by 0.5p.

Woodheads, however, remain the good guys and were happy to stand-on and their weekly price remains at 140p, although their DAPP-based contract pigs will have moved down in line with the index price.

This comes at a time when retail demand was reported to be firm with good volumes being sold and supermarkets will no doubt be quick to note that as producers are receiving less they may be tempted to trim their prices accordingly, although those of us who are unlucky enough (or sad enough) to find ourselves shopping in various supermarkets have yet to notice any significant reduction in retail pigmeat prices.

As a result spot bacon prices today were no lower than 131p with some northern abattoirs prepared to pay 2p to 4p above this and lighter cutter weight pigs for the fresh meat market are meeting a rising demand with premiums of 4p–6p above bacon.

Unfortunately a recent mini-rally in the value of sterling has pushed the euro down by 2 per cent to 84.9p compared with 86.8p a week ago.

Because of this cull sow quotes which had recently held at rather lacklustre but steady levels lost around 2p with reports of large numbers being handled through United Kingdom and European Union abattoirs signalling a black hole in the pig supply chain sometime in the spring/summer of 2011 (we hope).

Cull sow quotes in the region of 96p were available for sellers with large loads, but as low as 90p to 94p for smaller lots or on a collected basis and this sector remains very much a buyers market.

Lacklustre demand for weaners continues to underline the effects that high feed costs and an indifferent outlook for finished pig returns are having on the industry as a whole with the latest Agriculture and Horticulture Development Board 30kg ex-farm weaner average quoted at 342.81/head, but once again several reports of spot weaners being traded at less than 340/head, which is now well below their cost of production.

The precarious financial nature of our pig industry is also being challenged by the very negative approach some of the big banks are adopting as far as overdrafts are concerned. Far from the being "your farming partners" and using other such warm phrases with adverts of bank managers in shiny wellies, it might perhaps be more accurate if they just put "money lenders" on their letter heading and we would all know where we stood.

I have already booked two provisional clearout sales of pig equipment for the spring/summer of next year and unless we see a reversal of the current high feed/low pig price trend, more will follow.

And finally, although despite Jimmy and Alastair Butler's efforts to promote a supplementary levy was outvoted, they are to be congratulated for all the hard work put into the campaign and it has at least made everyone think long and hard about promotion to the extent that BPEX are now planning to devote an extra 3250,000 to marketing next year, so it is a case of "it's not how you travel, but where you arrive that matters."