Peter Crichton’s Commentary for December 24, 2015

It was a doubly disappointing and difficult end to the year, with very few positives to report on the trading front, although there may be some slight glimmers of light on the distant horizon.

The SPP slipped yet again and now stands at 124.23p, but, sadly, spot prices are much lower than this as most spot buyers have enough “regular” pigs to meet their needs. Very much a buyers’ market has emerged with spot quotes generally in the 111p to 115p/kg range according to load size and spec, but, once again, please bear in mind that spot quotes are for “extra” pigs rather than those purchased from regular sellers.

Weekly contribution prices remain under pressure and are generally within the 115p to 120p/kg range, but if pig prices keep heading south, these will face further falls in the New Year.

The upcoming Private Storage Aid (PSA) support package for pigmeat will provide processors with rates of aid between €210 and €305/t depending on the type of cuts and storage periods, which are normally between 90 and 150 days.

Rather like a second mortgage, which at least keeps the wolf from the door for a little longer, if prices do recover towards the end of the storage periods, it should be easier to absorb the extra product hitting the market later on.

The package is being introduced at a time when EU pig prices have now been more than 15% less than the five-year average for the past six months.

A slightly firmer euro, and possibly the availability of PSA, has helped cull sow prices to remain at stand-on levels. The currency traded on Thursday worth 73.42p, compared with 72.82p a week earlier, and most cull sow quotes were in the 50p to 52p/kg range according to load size and spec.

Weaner prices remain under pressure and, although the latest AHDB ex-farm 7kg average moved up a shade to £31.07/head, the 30kg ex-farm weaner average has slipped by £1.89 to £40.00/head. Weaner values are spread across a wide range according to when contracts were struck and, in all cases, spot weaners are trading at a significant discount compared with contract.

UK feed market wheat futures prices are continuing to drift sideways with January quoted at £112.75/t and July at £119.55/t.

On a more global basis, Russian wheat prices are also remaining under pressure, with reports of wheat export tax reductions following depreciation of the rouble and weaker international market prices. This comes at a time when Russian wheat exports are at near record levels and any bearish influence that may result will at least be welcomed by hard-pressed pig producers.

And finally, looking ahead, here’s my wish list for 2016:

  • firmer Euro;
  • end to the Putin ban;
  • pulled Pork Campaign takes off;
  • rise in demand for genuine UK pigmeat;
  • less promotion of cheap foreign pigmeat by retailers;
  • feed prices stay at or below their current levels;
  • welfare friendly British pork gets the premium it deserves for much higher production costs;
  • Ipswich Town Football Club to be promoted to the Premiership, but not to play Narwich there next season!

And finally finally, this awful joke fell out of a Christmas cracker recently:
Q: How does a pig write a letter?
A: With a pig pen of course!

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About The Author

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