Peter Crichton’s commentary for August 1, 2014

Now that August has arrived, demand was very much in holiday mode with no real bite to the trade – not helped by the DAPP continuing its steady descent, losing another 0.75p to stand at 160.93p, which is its lowest point this year.

Spot buyers seemed to be spoilt for choice with spare contract supplies available with a result they were able to mop these up at around the 154-156p/kg mark.

Hopefully, prices are now bumping along the bottom, but with the price of wheat continuing to tumble, the overall equation for pig producers still looks favourable.

European prices also seem to have levelled, with sows standing on and most traded in the 89-92p/kg range and a very modest improvement in the value of the euro traded on Friday worth 79.61p compared with 79.11p a week earlier.

The stand-on sow price was also underlined by the influential German pig market, where prices have held, but all reports are indicating there are still large stocks available in cold store and an end to the Russian blockade on EU pigmeat would be a relief to the trade as a whole but, for political reasons, looks unlikely to take place in the short term.

Weaner prices should be firmer than they are, with the latest AHDB 30kg ex-farm average at £57.03 and 7kg at £39.71.

Despite the availability of much cheaper feed, the main problem is the lack of finishing space in the system, and farmers are also preoccupied with harvest and straw carting when they could be earning money by buying some cheaper weaners and employ a youth from the village at the minimum wage for straw carting instead!

With harvest in full swing, grain prices remain under pressure with feed wheat traded at £110-113/t delivered and futures prices also continuing their downward plunge with November wheat quoted on the LIFFE market at £121/t and longer months such as May 2015 at £126/t.

Some grain traders are forecasting a stronger demand ahead on the back of lower prices in 2014/early 2015, but the feeling seems to be that cereal prices are probably almost as low as they can go, with barley looking particularly good value at about £92-95/t ex-farm.

And finally, with falling commodity prices across the UK, perhaps some light-land arable farmers might wake up to the fact that outdoor pigs provide an excellent, risk-free crop if they decide to let their land for pig production purposes as there’s a waiting list of potential tenants.

The situation has also been helped by the classification of outdoor pig land as “temporary grass” for SPS purposes, which means that none of the “Greening” or other two/three-crop rules will apply thanks to our colleagues in BPEX, the NPA and the NFU.

> 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

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