Big Abattoirs Not Shouting Loud Enough

UK - With the DAPP continuing to move ahead and now standing at a new high of 164.39p and spot bacon trading in the 170p/kg region, Tulip greatly disappointed sellers by deciding to stand-on with its weekly announced price with the result that the other four shout-price abattoirs did the same, writes Peter Crichton.
calendar icon 3 June 2013
clock icon 3 minute read

As a result the gap between spot and contract pigs continues to widen and underlines the unpopularity of the so called shout price system under which producers have to supply contract pigs, even if the price quoted is uncompetitive,

With some abattoirs looking to expand in the months ahead many will have to consider greater use of the DAPP or other pricing systems to maintain or increase their numbers. The latest shout price table reads exactly the same as last week:

Woodhead 166p
Gills 164p
Tulip 163p
Cranswick 162p
Karro 162p.

Spot bacon was generally traded in the 168p–170p/lkg region with one or two abattoirs particularly short of pigs prepared to pay ahead of this, but often on a tighter specification.

Much cheaper pig meat imports are continuing to pose a significant threat at the commodity end of the market where source and origin is less of a concern with imported carcasses at discounts of up to 25p/kg when compared with the domestic product.

The imbalance between continental and British pig prices is also reflected in the cull sow market where prices are 20p/kg below their position last year when the euro was worth barely 80p compared with 85.5p today.

Trade sources are quoting a combination of high stock levels in the European meat storage plants as well as indifferent demand at home and poor export demand with the Russian market remaining under pressure. A return to summer weather would work wonders when/if it ever comes.

As a result British cull sow quotes have remained at subdued levels trading within a fairly tight 99p–102p/kg band according to spec.

Weaner prices are continuing to reflect a shortage of supplies and more confidence in finished pig prices as well as a marginal easing in feed costs. The latest AHDB 30kg ex -farm weaner price now stands at £50.29/head and useful premiums are available for Freedom Food standard pigs.

The grain markets remain relatively static with nearby international grain futures drifting and LIFFE wheat futures quoted at £183.50/t for July and £177.50/t for November.

Soya however remains an expensive ingredient and with feed forming over 60 percent of the production cost of a pig, further reductions on this front would be more than welcome as according to BPEX production costs are still generally ahead of net receipts.

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