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Today's Market Needs Strong Nerves

by 5m Editor
17 January 2011, at 10:20am

UK - Spot pig sellers needed nerves of steel today to brazen their way through was has proved to be an extremely difficult market, writes Peter Crichton in his latest Traffic Lights commentary.

The latest DAPP which only moved down a shade from 137.67p to 137.42p gave no clue as to the difficulties facing the spot end of the market.

Tulip, Woodhead and Cranswick are also to be thanked for resisting the temptation to drop their weekly contract prices, but others were not so kind.

A combination of poor retail demand and much cheaper imports has meant that retail orders have been sharply cut at a time when pig growth rates and numbers are picking up; hence a finished backlog has quickly developed.

With most of the big players buying the majority of their pigs on contract or weekly prices these are now out of step with the spot market and imports causing yet more of a backlog in the system.

Although spot buyers had the opportunity to buy pigs as low as 126p to 128p for heavy bacon in some regions, by the time they had catered for their regular customers very few were actually looking for any extra numbers.

Unfortunately, all these 'rolled' pigs are putting on extra weight and backfat and at the same time chomping their way through scarce supplies of expensive feed.

An answer to the problem is for better point of sale and retail promotion to try and shift extra product and get the supply and demand system back into balance.

The roadside banners will help, but another look at Jimmy Butler's proposals for an additional marketing levy even in these very challenging financial times must be worth considering?

Not only have producers had to face falling finished pig returns, but have also been challenged by the problems caused by the German dioxin scare which has led to a cut of more than 10 percent in pigmeat consumption from the biggest pork consumers in the world.

As a result cull sow quotes have slumped in the course of a few days by up to 10p per kg and the two main export abattoirs were able to buy at delivered prices of little more than 78p per kg or via collection centres between 72p to 74p.

All this paints a gloomy picture for those producers who had perhaps hoped to gain some much needed revenue from cutting back on sow numbers.

Because of high feed prices it does not make financial sense to hold on to cull sows waiting for prices to recover (which they will at some stage) unless cheap feed sources are available.

The weaner market continues to be overshadowed by the feed price crisis as well as ongoing concern over the value of finished pigs in the weeks ahead and although the Agriculture and Horticulture Development Board 30kg ex-farm weaner average has improved a touch to £42.92 per head, in reality it is still quite hard to get more than £40 for a spot 30-kg weaner.

And finally, the only consolation is that producers will not lose as much money in February because it is a shorter month.