Cautious Optimism as Europe's Pig Supply Starts to Shrink

27 August 2012, at 8:55am

UK - Yet another disappointing day for sellers and the plot thickens over how it is that European Union mainland pigmeat prices have moved up by over 12p/kg since early July whereas those in Britain have remained virtually static, writes Peter Crichton.

Reports are also being received of rising wholesale prices for pigmeat, but little of this is being passed back to the primary producers without whom there would be no pigs to sell in the first place.

DAPP remains in the doldrums at 150.47p and Tulip set the stand-on trend by leaving its weekly shout price unchanged at 149p and everyone else followed suit with the result that the league table remains as follows:

  • 152p Woodhead
  • 150p Gill
  • 149p Tulip
  • 147p Cranswick and Vion

Demand for spot bacon also remained quiet between 148p–150p.

One day soon retailers and processors will have to wake up to the fact that the cheap pig well could soon run dry because with cereals at over 3200/tonne there is no way in the world in which pig producers can continue to take 150p for bacon, especially in the light of sharply rising European Union mainland values.

There is no better barometer of the state of the European mainland pigmeat market than in the cull sow sector where once again prices moved ahead by 1p–2p and quotes are now in the 113p–116p range according to spec helped by a stronger euro, which closed on Friday at 79.25p.

Despite larger numbers of sows being slaughtered there were plenty of takers and more could easily have been sold.

Although grain prices eased a shade on Friday, forward positions remain extremely expensive with the latest LIFFE November wheat quote at 3205/tonne and next July as high as 3211/tonne.

British ex-farm feed wheat is trading around 3194/tonne with reports of very disappointing yields affected by prolonged wet weather earlier on in the year, fusarium and poor bushel weights.

Probably the only bright factor has been better straw availability, it is just a pity we cannot train pigs to eat it.

As expected the weaner market is continuing to struggle with the latest AHDB 30kg ex-farm weaner average possibly bottoming out at 339.18/head, but probably 36- 38/head below cost of production.

When better finished pigs prices on the continent finally filter through to Britain this might provide finishers with a little more courage to spend more on weaner replacements rather than leaving units empty.

One way in which finishers can possibly improve their position is to sell pigs at lighter weights, i.e. around 70kg–72kg instead of 78kg plus, as this will improve cashflow and preserve scarce feed supplies, as well as putting less pigmeat on the market at a time when it is relatively easy to sell extra pigs to get the weights down.

If demand improves supplies will be tight and despite the upcoming bank holiday on Monday there were no reports of pigs being rolled, which is often not the case in late August.

Whilst there may be a few reasons for cautious optimism in the months ahead we need to get there first at a time when feed bills are continuing to outstrip pig cheques and a rapid reversal of the current situation is badly needed.