Difficult, Challenging and Depressing Day for Sellers

by 5m Editor
30 August 2011, at 9:01am

UK - As predicted, a difficult, challenging and depressing day for sellers with the DAPP in decline, dropping from 150.06p to 149.17p and likely to continue this trend in the future as shout prices are also heading south, writes Peter Crichton in his Traffic Lights commentary for 26 August 2011.

Tulip's decision to drop its weekly price by yet another penny sounded a warning note and hardly surprisingly all of the other main contract price buyers followed suit with the contract price rankings now as follows:
1st Woodheads 146p
2nd Tulip 144p
Equal 3rd Vion / Cranswick 142p
Last Gills 141p

Average 143p

A comparison with 2010 when the DAPP was 143.44p and the Tulip shout price 142p, underlines just how far these key index prices have drifted apart and the average shout price of 143p is now 6.17p below the DAPP, which is equivalent to almost 35 per bacon pig.

In the opinion of many the shout price system could be ruination of the British pig industry and is deeply flawed. As one producer remarked, he wishes he could buy his pig food on a similar system where he receives a contracted supply of feed at whatever price he decides on a Thursday night be would like to pay, because that is where we are in reverse as far as selling contract pigs is concerned.

The industry as a whole will have to come up with a better pricing system than this which is entirely retail/processor led and is only likely to go up on the back of any rises in European prices, which is a benchmark we cannot afford to be tied to because of our much higher production and welfare costs.

As a result of the further slide in contract prices and the DAPP there was no need for spot buyers to go out on a limb to get any extra pigs and quotes in this sector tended to remain between 140p–144p according to specification.

A mini rally in the euro has fortunately continued and by late Friday afternoon the euro was worth 88.5p compared with 87.5p last week, which once again helped cull sow prices to remain anywhere between a positive stand on and +1p with prices generally 105p–108p according to spec.

The weaner market goes from bad to worse mainly due to a lack of available space and the Agriculture and Horticulture Development Board 30kg ex-farm weaner average has fallen yet again to 342.63/head, with reports of spot weaners traded at well below the 340/head mark.

To rub salt in the various wounds inflicted on the pig industry, cattle prices have never been higher and sheep remain popular (not just in Wales) with cattle traded at over 350p/kg deadweight and sheep at 400p/kg deadweight compared with a humble pig at less than half this figure, but how silly of me to forget that cattle and sheep are not sold on a self-set shout price system but are in a sector where there is still plenty of alternative live auction competition and smaller wholesalers operating.

On a more positive note the schools are soon due to go back as the holiday period draws to a close which might perhaps help to kick-start demand and mean that a few retailers could start selling our product rather than giving it away.