Tulip Confounds Markets by Dropping Shout Prices

UK - Following signs last week of a possible improvement in pig meat prices, Tulip confounded the market by dropping its shout price to the tune of 3p and this now stands at 153p and is down by 6p ( 34.50/pig) compared with its value three months ago, writes Peter Crichton.
calendar icon 11 February 2013
clock icon 4 minute read

Unfortunately the Tulip drop served as a signal to all the other shout price abattoirs who moved their prices down 1p–2p. As a result the shout price table now looks very battered and bruised and is as follows:

156p Woodhead
153p Tulip, Gill
151p Karro (formerly Vion) and Cranswick.

The DAPP however moved down only 0.8p and now stands at 157.68p.

The only stability in the trade was in the spot market where despite falls in contract values spot bacon buyers were out buying, predicting slightly better retail demand in the week ahead and were prepared to quote prices in the 150p–153p range according to spec.

With Tesco looking hard for farmer suppliers for its recently launched Sustainable Pig Contract, which includes a feed tracker, the recent drop in shout prices may encourage many producers to get on the phone.

With reports that the Tesco price is likely to be in the 170p net region with additional premiums for free farrowing and straw based finishing work another 5p, this may appear a much more attractive option than the current shout price system.

Cull sow prices always provide a ready barometer of the pigmeat price situation in mainland Europe and despite the euro tumbling by almost 3 percent from 87p last Friday to trade at 84.6p today, cull sow quotes moved up by a remarkable 3p/kg in the face of the currency travelling in the wrong direction with most delivered quotes in the 101p–103p range according to spec.

Reports of more herds due to be culled provide a further indication of the financial plight of the industry as a whole and the need for processors and retailers to wake up to the fact that high welfare British pig supply will be very much subject to the "use it or lose it" rule.

This comes on the back of the latest horse meat in processed food scandal to hit headlines, but must surely provide the pig industry (and the remainder of British agriculture) with a golden opportunity to promote the merits of the Red Tractor, which does not apply to the equestrian world.

The weaner market is also continuing to reflect the possibility of better prices in the months ahead and although the latest AHDB 30kg ex-farm weaner average remains becalmed at 346.32/head, reports of spot trades at 32– 34 ahead of this especially for Freedom Food standard weaners are being received.

Feed prices continue at eye-wateringly dear levels and although the market has not moved up much in the past week, ex-farm wheat is still being quoted at 3207.50/t and futures prices are indicating March wheat trading at 3208.30/t and July at 3210.95/t.

Finished pig prices are still 10p–15p/kg behind CoP levels even for the most efficient producers and something will need to change soon or more producers will head for the exit gate.

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