Peter Crichton’s commentary for April 17, 2014

Demand has remained relatively firm in the run up to Easter, with the DAPP nudging ahead to 163.28p, but still lagging well behind equivalent spot prices and the newly announced Average Pig Price (APP) which was published at 164.94p. We have to remember that this relates to trading prices two weeks ago when the DAPP was 163.07p, a difference of just under 2p/kg.

But why the difference?

This is because the APP is provided by sellers and includes what were previously known as “below the line” and bonus payments, whereas the DAPP was based upon data submitted by abattoirs, which in some cases excluded bonus and other stealth payments paid in addition to the bid price.

Unfortunately, signs are emerging that a second new index price known as the Standard Pig Price (SPP), which was designed to run in tandem with the APP until the DAPP is terminated in six months time, may have a delayed start date, apparently due to the reluctance of some processors to provide all the necessary data.

The biggest flaw with all three pricing systems is that none of them appear to include retrospective prices, such as the DAPP plus 3p payments that some producers are getting if (which is often the case) their weekly price returns lag behind this level.

It’s all very complicated for the uninitiated; perhaps we will have another price index soon known as the Craftily Renegotiated Average Price!

This week spot bacon traded in the 167-169p/kg range, and despite some (but not all) abattoirs closing on either Good Friday or Easter Monday, there has been no rollover of pig numbers and demand has remained useful throughout.

The recent weakness of the euro, which traded on Thursday at 82.29p, coupled with the ongoing fallout from the African swine fever ban on pigmeat imports to Russia, has conspired to push cull sow prices down by a copper or two with values struggling to hit the 100p/kg mark and generally a few pence below this.

Although the AHDB ex-farm weaner average is also showing an easier trend, with 30kg weaners quoted at £55.70/head and 7kg piglets at £40.32/head, demand remains firm for good-quality, well-matched, tail-docked, vaccinated weaners in both categories, and for those with Freedom Food accreditation, premium prices of £2-4/head are generally available.

One of the reasons for a slight easing in weaner values may be as a consequence of higher feed prices; on the LIFFE futures market feed wheat was trading at £170/t for May, £172.25/t for July and £160.50/t for November.

Escalating tensions in Ukraine and dry weather conditions in the US and key EU wheat producing areas may explain why this bullish trend is developing on the soft commodity markets.

And finally, although the UK pig industry is in better financial health than it has been for a number of years, outdoor producers still have a number of challenges to meet in the year ahead, including compliance with the new Basic Payment System 2 / 3 crop rule, as well as dealing with ways in which NVZ levels can be complied with, not to mention the lack of landlords prepared to let land for outdoor pig production because of the counter-attractions of forage maize rents, root and vegetable production and worries over cross compliance and soil erosion which have been a feature of our recent monsoon winter weather conditions.

But the NPA and BPEX will be working hard to provide outdoor producers with guidance and advice to tackle this in the months ahead, so hopefully the vital Freedom Food outdoor pig sector of our industry will continue to flourish where it can.

> Based in Suffolk, Peter Crichton provides a wide range of valuation, auction and livestock marketing services, as well as supplying the UK pig industry with a wide range of consultancy services covering tenancy, contract advice, pig equipment and herd valuations as well as dispute resolution. For more information visit: www.petercrichton.co.uk

Get Our E-Newsletter - Pig World's best stories in your in-box twice a week
Will be used in accordance with our Privacy Policy
Share.

About The Author