Gap Between Open Market and Weekly Prices Widens

by 5m Editor
9 May 2011, at 7:01am

UK - The weakness of the weekly shout price system came in for further criticism as the gap between “open market“ and weekly prices continues to widen, writes Peter Crichton in his Traffic Lights commentary for Friday, 6 May.

Although the DAPP is slow to react and is basically a historical record of pig prices two weeks ago, and rose only by 1.35p to 142.97p, spot prices have surged ahead mainly due to the Arctic weather conditions experienced last winter.

The gap between contract and spot prices is tempting some sellers who badly need the money to meet feed costs to switch pigs away from contract to spot and to earn premiums of up to 10p/kg ( 37- 38/pig).

The contract supply situation was not helped by Tulip moving its shout price up only 2p, to 147p, with Vion and Cranswick going up by exactly the same amounts.

The current weekly price steeplechase results are as follows:

1st Woodhead 152.00p (+ 4p)
2nd Cranswick 147.50p (+ 2p)
Equal Last Tulip and Vion 147p (+ 2p)

Spot quotes on the other hand averaged 155p with one or two plants short of pigs prepared to pay significant premiums and anyone who sold at less than 153p was probably behind the market.

Although the euro took something of a downward dip from 90.3p on Thursday to 88.28p on Friday and some cull sow buyers were tempted to drop their price by 2p, for those sellers with stronger nerves stand-on was still achievable later in the day reflecting reasonably firm European mainland pigmeat prices despite the emergence of extra product onto the market coming out of Private Storage Aid cold stores.

Cull sow sellers were able to negotiate prices of generally between 108p–110p on a delivered basis or 104p–106p ex collection centres.

Weaner prices are still lagging behind CoP levels with the latest 30kg ex-farm AHDB average quoted at 343.75/head and will continue to be affected by volatile feed markets.

At the time of preparing this report LIFFE wheat futures prices for May to July were showing reductions of around 36/tonne, but unless some much needed rain hits Western Europe soon, prices could move ahead yet again.

Compared with beef and lamb, pork still remains an absolute bargain and retailers are well placed to provide hard pressed producers with a better return at a time when most are still losing money.