Pigs Will Move from Contract to Spot

by 5m Editor
10 April 2012, at 7:19am

UK - With the gap between shout and spot prices growing ever wider, bacon abattoirs buying on weekly contract prices should not be surprised if their numbers start to dwindle as producers switch to the much more lucrative spot market, writes Peter Crichton.

Tulip moved its price up by a modest penny this week, but Cranswick broke ranks with a slightly more realistic 2p. However spot sellers were able to command bids in the 147p–150p region as numbers continued to tighten throughout the market as a whole.

Most of the other shout price players followed suit and the league table now reads as follows:

1 145p Woodhead + 1
2 144p Gill + 1
3 143p Cranswick + 2
4 142p Tulip + 1, Vion + 1

Compared with beef and lamb, pigmeat seems to be something of a loss leader with the retailers, but it is sadly the primary producer who is being made to pay the price for this. Better promotion and dwindling numbers would work wonders for pig prices at a time when producers need every penny they can get and several more besides.

One positive factor has however been the fact that despite two short weeks over the Easter holiday no pigs have been rolled and once we are back to a normal working week, forecasters are suggesting that demand will improve in the face of falling numbers.

After several rising weeks European mainland pigmeat values are also tending to level out and the effect of this was also felt in the British cull sow market coupled with the recent poor performance of the euro, which on Thursday was traded in the 82.55p region compared with almost 85p at the end of February.

As a result cull sow abattoirs generally trimmed their prices back between 1p–3p according to region and specification with delivered quotes generally in the 126p–130p range and collected prices circa 122p.

Even at these slightly lower levels cull sow returns are providing a useful bonus for producers restocking their herds at a time when breeding gilts also look relatively good value.

Further feed price rises are having a knock-on effect as far as weaner values are concerned with the latest Agriculture and Horticulture Development Board 30kg ex-farm weaner average quoted at 345.93/head, but still probably 32 to 34 below cost of production.

May and July feed wheat quotes on the LIFFE market are now in the 3171- 3172.50/tonne range and soft commodity markets remain bullish throughout much of the world despite the latest United States Department of Agriculture information that plantings are progressing well and crop condition is good.

Although recent rainfall in some of the eastern counties of Britain was welcome, more will be needed in the months ahead if cereal yields are to be maintained. As feed remains the highest single cost a pig producer faces, any further rises must be reflected by better finished pig prices or producers' profit and loss accounts will continue to make unhappy reading.