An Unhappy Start to the New Year

UK - Pig trading kicked off the New Year on a negative note and although the DAPP rose slightly from 137.42p to 137.67p, the spot market has moved sharply in the opposite direction, writes Peter Crichton in his latest Traffic Lights commentary.
calendar icon 10 January 2011
clock icon 4 minute read

January is often a challenging month due to a combination of tightening of the purse strings in the high street as well as more pigs becoming available following the Christmas/New Year break.

One positive note however was that all of the big players including Tulip, Vion, Woodhead and Cranswick are to be commended as they stood on at a time when in the past they might have been tempted to drop their prices.

Spot bacon sellers were however left out in the cold with reports of prices as low as 130p on a take-it-or-leave-it basis being available. Any finished pig contracts should be locked away in a safe place for the time being.

Slightly warmer-hearted buyers were prepared to hold their spot bacon bids in the 132p–134p region, but generally for slightly lighter weights with heavies worth no more than 130p and a pathetic return when compared with soaring feed prices.

Although clear signs are emerging of pig shortages in the supply chain, this may not start to bite until the spring and there is only a limit to the time that some producers can continue to tread water before they go under.

Recent improvements in the value of the pound have done nothing to help on the import/export front and the euro closed on Friday worth 83.6p, which is 2 per cent less than its value at the end of last year.

Cull sow prices have now been in retreat since late summer and have fallen from 100p to 90p over that period, which is equivalent to a drop in value of 315/head and a further kick in the nuts for those producers looking to cash in unproductive sows to try and reduce their overdrafts.

Cull sow sellers with large loads this week were able to obtain no more than 91p/kg at best with other prices as low as 84p and this sector still remains very much a buyers' market.

Although feed wheat prices have come slightly off the boil in the last couple of days, delivered spot wheat quotes are still nudging the 3200/tonne mark and forward values are also painting a very expensive picture.

Soya prices remain ahead of 3300/tonne and the costs of finishing a pig from 7kg–100kg have risen by well over 320/head in recent weeks at a time when returns have fallen by up to 310/head.

Weaner prices have however remained at similar levels helped to some extent by a reduction in supply following the recent cold snap and the AHDB 30kg ex-farm average is holding at 341.31/head, but this is probably some 34– 36 below cost of production levels once increased ration prices are taken into account.

Further vigilance will be needed on the biosecurity front following news of a virulent outbreak of swine dysentery on a Norfolk pig unit which seems to be linked to the recent spate of frozen lorry washes at abattoirs and the inability of hauliers to be able to move pigs with clean and disinfected trucks.

Livestock vehicles remain the weakest link as far as the spread of disease is concerned and an area which requires much greater investment by abattoirs who often seem to regard the lorry wash as an inconvenience rather than part of the overall service they are committed to provide within the pig supply chain.

Only another 51 weeks to go, but hopefully during that period some light will appear at the end of the tunnel rather than an approaching train!

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