Peter Crichton’s commentary for February 28, 2014

Although the DAPP shed another 0.48p and now stands at 163.96p, which is its lowest rate since the May 18, 2013, UK pig supplies are reported to be tightening and it may be that a price upturn – like spring – is just around the corner.

Most contract prices which have DAPP/spot links are now working out in the 166-168p/kg range, whereas spot quotes were much more variable with a range of prices anywhere between 156p and 165p/kg quoted, reflecting the fact that most sellers preferred to leave their pigs on contract following several weeks of much lower spot bids.

However, the climate on the other side of the English Channel is distinctly more chilly with the ongoing Russian ban on EU mainland pigmeat imports continuing to hit manufacturing pigmeat values with the result that most EU producer countries prices are now lagging some 40p/kg behind our own.

The future EU pigmeat supply situation has not been helped by the recent news that the Russians intend to replace the EU pigmeat deficiency with supplies from Brazil.

There are also fears that some of the larger retailers may choose to source greater volumes of much cheaper foreign pigmeat produced to lower welfare standards to keep their shareholders (and customers) happy.

Cull sow prices have, however, always provided a valuable barometer of EU mainland pigmeat values and the euro reflected this static trend by closing on Friday little changed worth 82.44p.

Please excuse the mixed metaphor, but weaner prices are reflecting a bullish trend with the latest AHDB 30kg ex-farm weaner average quoted at £54.64/head and 7kg weaners at £41.50/head, but it’s been difficult to buy spot weaners at this level as more finishers wake up to the fact that there are good margins to be earned providing feed costs remain under control.

Feed markets have indicated slightly firmer trends with ex-farm wheat quoted at £154.40/t, up £3/t on the week.

This firmer trend was also reflected on the LIFFE futures market, where May feed wheat futures have touched £157.50/t representing a modest £5/t rally due to forecasts of intemperate weather in the US and some concern over recent events in the Ukraine.

Drier weather in Brazil is also adding value to soya bean prices a starting to hold a bullish position with UK East Coast port quotes nudging up towards £400/t, with the market also affected by hot dry weather yield reductions.

> 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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