Woodhead Breaks Ranks

by 5m Editor
31 May 2011, at 9:02am

UK - A ‘glass-half-empty’ day for sellers as pig prices are moving in a sideways direction compared with feed wheat which put on another 38 per tonne this week with spot ex-farm quotes now touching 3190 per tonne.

Probably the biggest disappointment of the day was Tulip's decision not to increase their shout price which remains stuck at 150p despite the DAPP having risen by 3.41p over the same period.

As a result Cranswick and Vion left their weekly prices unchanged at 149.5p, but Woodhead are to be commended as the only major processor to break ranks. They put up their weekly price by a further 1p and are now well ahead of the rest at 155p.

Retailers and processors need to realise that it is financially unsustainable for producers to be expected to continue to turn out pigs at a loss while everyone else in the supply chain continues to make a profit.

There was more of a bearish feeling in the spot sector where quotes remain within a fairly wide range of between 155p to just over 160p.

A glance in the diary reveals that this time last year the DAPP was only a few coppers below its current level whereas wheat prices have doubled and my phone has been busy with calls from long-term producers who are seriously questioning how much longer than can afford to stay in business and effectively subsidise the retailers' profits.

The current state of the pigmeat market is not being helped by much cheaper imported carcasses hitting our shores from Spain, Belgium and the Netherlands and it seems retailers are using United Kingdom pigmeat as a loss leader, especially when compared with beef and lamb.

Recent falls in the value of the euro which closed on Friday worth 86.8p have done nothing to help as far as the pigmeat import/export balance is concerned and partly due to this and also underlying weaknesses in the European mainland pigmeat markets, cull sow quotes dropped back by a further 2p/kg with 100p only available for sellers with large loads and most prices generally in the 96p–98p category.

Weaner prices have levelled out with the latest Agriculture and Horticulture Development Board 30-kg ex-farm average quoted at £45.77 per head, which because of high feed costs is less than the producer needs and more than the finisher can afford to pay.

So once again the message to the big retailers and processors is ‘use it or lose it.’