Buyers Getting Very Nervous

17 December 2012, at 10:24am

UK - With the Christmas break almost upon us and buyers very nervous about having unsold carcasses hanging in their chillers over the holiday period, demand eased back especially as far as spot pigs were concerned not helped by reports of the availability of significantly cheaper imported European Union pigmeat where producer prices have fallen by 15p/kg since early October, writes Peter Crichton.

The DAPP which is based upon the previous week's prices in fact moved ahead and now stands at a new high of 160.8p, but weekly contract prices all stood-on with the result that the latest pecking order remains as below:

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

Because of indifferent demand however, spot prices took quite a knock with spot bacon traded in the 155p region with numbers hard to move, but fortunately there is no real backlog of pigs in the system.

Despite the euro holding its value and trading at 81.36p compared with 80.71p a week ago, very limited demand for cull sow meat in Europe due to the upcoming holiday close-down saw cull sow quotes plummet to not more than 100p/kg in most cases and lower than this for some sellers.

However with the cost of feed still preying on farmers' minds feeding a cull sow is not necessarily an economic option, but many may have no choice over the next two weeks until slaughtering numbers return to normal in the New Year.

Weaner values are however continuing to reflect a certain amount of confidence in finished pig prices next year with the latest AHDB 30kg ex-farm weaner average moving up a touch to 346.09/head and more buyers looking than in recent weeks.

The industry has greeted with relief the news that the Vion saga appears to be over and a management buy out of the Vion UK pork sector is on the cards subject to Competition Authority approval.

Assuming that the new management team want to revitalise the Vion pigmeat business as well as more interest being shown by producers in the Tesco sustainable pig supply chain, interesting times are ahead for sellers, but with current CoP at around 170p pig buyers will need to be considering higher levels than this to put the industry back into profit.

Another positive sign was a slight dip in worldwide cereal prices due to the latest USDA report showing an increase in supply due to increased production and reduced export demand for US wheat.

So all in all a mixed picture for industry prospects in 2013 is starting to emerge and although January is a notoriously difficult trading month, better times may lie ahead after this.