New DAPP-spot Matrices Will be Fairer for All

UK - Despite reports of falling pigmeat prices on the continent, British demand remains firm due to a significant shortage of slaughterweight pigs. The gap between the remaining weekly contract prices and spot is still too wide, writes Peter Crichton.
calendar icon 10 September 2013
clock icon 3 minute read

Although Gills was bold enough to move its price up another penny to 171p, not for the first time Tulip disappointed those sellers still on its shout price system by standing-on at 168p.

Spot prices have remained firm with buyers looking for pigs throughout the day and most spot bacon was traded in the 174p–176p/kg range according to spec.

Producers who have recently switched away from selling on a shout price basis to a mixture of 50 percent DAPP and 50 percent spot should enjoy a price rise next week, once the effect of higher spot values and a firmer DAPP filters through.

A note of warning however for those who are going through re-pricing arrangements — try and avoid being solely DAPP-linked as this could lead to a self-feeding inflexible price which both buyers or sellers will at some stage be unhappy with.

Some sellers are also including a "shout" element in their overall price calculations, but once again these are to be treated with caution as there could be a temptation to understate these to try and level the matrix price.

Ominous signs of easier prices in Europe were reinforced by sharp falls in cull sow values which dropped by 5p/kg this week and 130p/kg now represents the top rather than the bottom price with most traded between 126p–129p/kg, not helped by the euro which closed on Friday trading at 84.25p compared with 85.35p a week ago.

With harvest virtually over, demand for weaners is starting to pick up as farmers look to fill empty yards for autumn finishing and the latest AHDB 30kg ex-farm weaner average price has now risen to £53. 70/head with 7kg types trading in the £36-£38/head region according to load size and assurance status.

Cereal prices have enjoyed a relatively quiet week with a slightly bearish trend with ex-farm wheat quoted at £149/t and forward prices on the LIFFE market saw November wheat traded at £155/t and £161/t for May 2014.

As previously mentioned now might be the time for producers to get at little more feed cover to face the year ahead with one less thing to worry about.

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