Peter Crichton’s commentary for April 24, 2015

One of the few bright spots of the day were reports that UK live pig numbers are starting to dwindle a shade and, as a result, no pigs were rolled – although finisher prices have stayed very much at stand-on levels.

The SPP put on a little ground, adding 0.14p/kg to stand at 132.33p, and Woodhead’s played catch up by moving their weekly announced price up to 127p, but still have a long way to go – as do Cranswick which remains at 125p.

Spot bacon quotes remained at similar levels, with most bids around the 128p to 130p mark, but some traders are keeping an anxious eye on the calendar as we face yet another short week with the May 4 Bank Holiday looming on the horizon.

In view of the low level of weekly announced prices when compared with the SPP and the APP, one of my customers suggested that these should be renamed the Craftily Renegotiated Average Price! It is, however, only fair to say that weekly announced prices need to be seen in the context as an ingredient of the matrix price as a whole, with some abattoirs offering SPP x 2 and weekly announced x 1, in which case the weekly announced price makes up a smaller proportion of the whole calculation, but this isn’t always the case.

Falls in European mainland pigmeat prices, including a drop of 3c in the German weekly pig price, soon filtered through to the cull sow market, and although prices just about stood on, numbers are building up and demand remains lacklustre, with most quotes in the 58p/kg to 62p/kg range.

This situation has not been helped by the ongoing poor performance of the euro, that traded on Friday worth 71.62p, compared to 71.85p seven days ago.

The weaner market has also continued to suffer from the uncertain future facing finished pig prices in the months ahead, with reports of one major abattoir looking to process fewer pigs in the future, and as a result, the latest AHDB 30kg ex-farm weaner average had fallen yet again and now stands at £43.34/head, with 7kg quoted at £33.13/head, both of which are significantly less than the cost of production.

The grain market is, however, continuing to operate in producers’ favour, with May feed wheat quoted on the LIFFE market at £114/t, new crop in November 2015 at £123.75/t and ex-farm feed wheat recorded at £108.2/t in Farmers Weekly.

Falls in protein prices have also helped to put something of a smile back on producers’ faces, with Hi Pro soya trading at £306/t from East Coast stores, which has left soya meal at its cheapest level in more than three years.

And finally, Tesco’s woe could become a problem for the pig supply chain as a whole, and all of the major retailers are under significant financial pressure to improve their margins so they’ll be looking to drive some very tough deals with their suppliers, including processors and pig producers.

Tesco’s record pre-tax loss of £6.4 billion for the year to the end of February compares with an annual pre-tax profit of £2.26 billion a year earlier. Although its record loss included a number of one-off items such as 43 store closures, it still managed to achieve a group trading profit of £1.14 billion.

As all meats, including pork and bacon, are a relatively “expensive” commodity, now’s not the time to be expecting any sorely needed pigmeat price increases, but with spot and contract bacon pigs trading around the 130p mark, most producers are, unfortunately, trading in the red and with larger numbers of sow slaughterings on the cards, it looks as though several more could be heading towards the exit gate unless things improve in the very near future.

> 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