Peter Crichton’s commentary for August 8, 2014

Prices are continuing to ease with the latest DAPP slipping by 1.37p to 159.56p, which is something of a puzzle when compared to the SPP (Standard Pig Price) for the same week of 159.64p, which for those of you with a basic grasp of maths will realise is higher than the DAPP.

The curious feature of all of this is that the DAPP is meant to include Freedom Food and other bonus payments, whereas the SSP, as its name suggests, was designed to reflect the average value paid for standard (non-Freedom Food) pigs.

If, however, pigs are being sold on a retrospective DAPP top up basis that doesn’t feature in the DAPP submission for that week, that would explain the lack of any difference between the two, but underlines the fact that the DAPP returns must, therefore, be underreported (or manipulated as some have suggested).

The main thing is that any index price published is correct, which is clearly not the case at present (if it costs £30 to fly to Dublin with Paddy Air plus £10 airport taxes, the overall cost is £40 – not £30!).

With buyers keeping everyone to exact contract numbers, extra pigs went on to the spot market with the result that buyers were, once again, spoilt for choice and were able to buy in the 150p/kg region.

However, sellers should keep a wary eye on the calendar because the August Bank Holiday looms in two weeks’ time, which will result in the loss of a whole slaughtering day among some of the larger abattoirs and we may have to look to mid-September before supply and demand gets back into balance.

The problem is that the rolled pig becomes a heavy pig and a lower price per kilo will feed into index and spot prices, so to some extent taking a certain amount of medicine now might be the better option rather than hanging out for prices to improve, which is unlikely to occur in the short term.

The recent Europe wide ban on all food imports into Russia is also not helping as far as European pigmeat prices are concerned, and sows once again stood on, despite the Euro closing this week at a slightly firmer level trading on Friday worth 79.85p. There were some indications that sow numbers were tightening, with farmers busy with harvest, and most quotes were in the 90-93p/kg according to load size and spec.

Although the latest AHDB weaner prices appear to be holding reasonably firm, with 30kg ex-farm weaners quoted at £56.07/head and 7kg at £40.19/head, these mainly apply to contract deals and the spot market is operating in a much chillier climate with 7kg piglets trading between £35-38/head and 30kg weaners also at a discount selling at not much more than £50/head with space still on the tight side.

An increase in finished pig slaughtering levels would work wonders by clearing overstocked finishing units and creating more space for weaners at a time when feed prices are containing to tumble and weaners look particularly good value.

The latest ex-farm feed wheat quotes are as low as £109.50/t and futures prices have also remained under pressure with November feed wheat quoted on the LIFFE market at £124/t and January slightly firmer at £126.80/t.

And finally, as the threat of African swine fever continues to creep ever closer to our shores, producers are urged to maintain a Red Alert status of vigilance, because if we do get struck down with ASF or, heaven forbid, PEDv, this could be the beginning of the end for many involved in the UK pig industry, which up to now has managed to maintain generally higher health levels than other parts of Europe.

> 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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