Tesco Contracts Could Help Iron out Peaks, Troughs

by 5m Editor
26 November 2012, at 2:22pm

UK - Stand-on across the board seemed to be the order of the day although some producers were commenting that it is high time that the shout prices moved up again ,as most have been at similar levels for six weeks now, to match rises in the spot market and an improving DAPP which now stands at 160.13p, writes Peter Crichton.

Traffic lights spot, DAPP, Europe reference


The batting order remains:

163p Woodhead
160p Gill
159p Tulip, Vion
158p Cranswick.

Spot bidders were generally prepared to take reasonable numbers and to pay in the 162p–164p region for spot bacon according to spec.

Some of the smaller fresh meat wholesalers have however been reporting rather slow demand which is something of a worry at what should normally be a busy time of year, but perhaps things might perk up when December arrives.

There has also been much talk about the Tesco initiative to set up a sustainable supply chain with pig prices based upon a CoP matrix with wheat and soya escalators, which might be a way in which producers can try to iron out the peaks and troughs which have plagued the industry over the years.

But it is important that the CoP base price is correctly calculated and also includes an element to cover reinvestment and profit, which is what has been lacking from the industry for so many years.

A slight improvement in the value of the euro which traded on Friday worth 80.9p did nothing to arrest a drop in cull sow prices which have fallen by an estimated 3p/kg with the result that most culls are now traded in the 113p–116p range according to spec.

This fall is apparently due to a reduction in demand at a time of year when there is enough product in the system to meet Christmas consumption levels rather than a pointer towards significant falls in European pig meat prices as a whole.

Weaner prices are continuing to improve reflecting hopes that finished pig values may follow an upward track next February/March based upon estimates of falling European production levels following the stalls ban as well as herds being culled due to very high feed prices.

The latest AHDB 30kg ex-farm weaner average now stands at 345.12/head and 7kg pigs are generally trading in the 330 plus territory with premiums available for Freedom Food.

Feed prices however remain the major talking point with November wheat quoted at 3215.50/t and next May as high as 3222/t putting further pressure on production costs, which is another reason why the Tesco initiative may provide a welcome respite for hard pressed producers.