Peter Crichton’s commentary for December 19, 2014

As the year draws to a close, pig prices remain on something of a downbeat note and the only positive factor has been that there are very few reports of pigs being rolled into the difficult short trading Christmas/New Year period.

On the price front, however, the SPP continues its steady decline and now stands at 143.84p compared with its mid-June position of 162.02p – a reduction of 19p/kg that works out at £15 for a heavy baconer.

Spot buyers were noticeable by their absence this week, with very little activity in this sector, although one or two of the smaller, fresh meat abattoirs reporting a slight upturn in orders and the upcoming cold weather might help to reduce pig growth rates and sharpen human appetites.

Contract prices linked to the SPP or other index figures have continued to follow a slight downward path, although most weekly announced contract prices have held at stand-on levels.

Cull sow prices have also remained at disastrously low levels, reflecting the onward problem with the lack of storage capacity throughout much of mainland Europe, arising from the Russian embargo on EU mainland imports, which is now having a serious effect on the whole of the European pigmeat supply chain. There continue to be reports of significant number of pigs trickling into Russia through various “back doors”.

As a result, where space was available, the two major UK export abattoirs were only really interested in purchasing sows in the 63-65p range, and until the Christmas and New Year holiday period is over, it’s hard to see whether or not any recovery might be on the cards.

Reports are, however, emerging of the possible introduction of aid to private storage that would be a welcome Christmas gift for the time being.

The situation has not been helped by a weakening euro, that traded on Friday worth 78.34p compared to 79.38p seven days earlier.

Weaner prices are also nearing the end of the year on a downward note, with the AHDB 30kg ex-farm average quoted at £46.85 and 7kg weaners at £35.28, but once again, there’s a wide gap between spot and contract values, and sellers with contracts should put them in a safe place.

The downward pressure on weaner prices has not been helped by the lack of spare finishing space in the system, as well as bullish trends in the feed markets. Ex-farm wheat is reported to be trading on a spot basis in the £127/t region and futures quotes are also reflecting a firmer trend, with feed wheat quoted on the LIFFE market at £135.40/t for January, with May traded at £138.85/t and November now at £143/t.

Apparently, one of the reasons for the recent volatility in wheat prices has been proposed cutbacks in Russian grain exports in order to try and reduce domestic inflation, but it may yet be that the bearish nature of the global supply market could, at some stage, put some downward pressure on wheat prices once the problems facing the Russian economy are more clearly understood.

Protein prices have also experienced some volatility, with hi-pro soya ex-East Coast stores trading a shade firmer at £338/t, and UK rapemeal was also up by £5/t to £186/t.

And finally, Defra’s latest final estimates based on the June 2014 census are indicating a 4.1% reduction in the size of the UK pig breeding herd, with a sharper drop of 7% in the number of gilts retained for breeding, all of which may help to reduce UK pig availability in the year ahead to some extent. On this basis, perhaps the “less is more” benefit will come into effect?

> 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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