Peter Crichton’s commentary for August 29, 2014

Although the DAPP lost 0.29p and now stands at 158.06p, as a rule, most spot prices have stayed at stand-on levels. Hopefully we may be nearing the end of the recent price decline, although the Russian import embargo is doing us no favours.

With contract space still tight, spot bacon buyers were able to pick and choose to some extent and although 150p remains a minimum base price, it was hard to persuade buyers to bid much more than this except for “regulars”.

It’s interesting to see, however, that the SPP (Standard Pig Price) and the DAPP are almost identical, but it’s still a bit of a puzzle why the SPP, which is only designed to reflect Standard Pigs, should be almost the same of the DAPP which is meant to include premiums and other payments paid to producers. It’s a funny old world.

Another negative facing the industry is a weakening euro, which traded on Friday worth 79.3p compared with 79.87p a week ago. However, the weakness of the euro had little effect on cull sow values, which remain at stand-on levels, with most abattoirs paying in the 92-94p/kg range according to spec, but sow prices are still awfull as 12 months ago we were getting 132p/kg, a differential of £60/head, but this helps to underline the weakness of EU mainland payment prices.

Another negative from the Russian embargo is the lack of other suitable outlets for fat (white meat), and as a result the value of the fifth quarter of the sow is under pressure as larger volumes go into cold store.

Weaner prices continue their roller-coaster ride, with the latest AHDB 30kg ex-farm average losing more than £4/head to stand at £51.24/head. 7kg weaner prices are also under pressure and now stand at £38.79/head. A shortage of rearing and finishing space is the culprit and, as a result, the weaner sector remains very much a buyers’ market, despite the availability of much cheaper feed ingredients.

Although Friday’s feed wheat quotes on the LIFFE market improved marginally with November quoted at £122.50/t and March at £127.50/t ex-farm, spot wheat prices are still under pressure with the latest UK average value quoted at £110.20/t. In the Eastern region, some farmers are having to take as little as £105/t for their wheat.

Looking further ahead, the grains market continues to be influenced by bearish trends following recent USDA reports of record wheat production levels.

The outlook for proteins also remains under pressure with hi-pro soya in East Anglia for August quoted at £330/t and rapeseed trading at £160/t.

And finally, well done to BPEX for all its hard work on the lorry wash survey earlier in the year, but with the threat of PEDv from the West and African Swine Fever from the East, pig producers at the moment will need eyes in the back of their heads. Once again, every effort should be made to try and persuade abattoirs to upgrade their washing and disinfection facilities where necessary, because livestock lorry biosecurity remains one of the weakest links in the pig heath chain.

> 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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