Peter Crichton’s commentary for January 17, 2014

The third week in January is often a difficult time for sellers, with a combination of purse-tightening by consumers as well as much cheaper imports hitting the market, with the result that spot quotes have fallen again by a further 2-4p/kg. In many cases it was difficult to achieve much more than 160p/kg deadweight for spot bacon, but very few pigs were traded at this level.

Contract prices tied to the DAPP have, however, fared significantly better and something of a two-tier market has developed. The latest DAPP actually put on 0.1p and now stands at 168.99p, so those sellers with DAPP+4p Red Tractor contracts were achieving prices close to 173p/kg and Freedom Food pigs another 4-6p/kg above this level.

No doubt lower spot prices will put downward pressure on the DAPP when it’s announced next week, but once again a feature of the market has been the fact that most pigs were sold, although a short working week due to renovation works at the Tulip Westerleigh plant left some pigs in the system.

Sow prices have remained reasonably firm with most traded around the 100p/kg mark, although reports are indicating that European pigmeat prices remain under pressure also due to reduced demand at this time of year.

The euro ended the week in a weaker position than seven days ago, falling from 82.78p to 82.47p, which did nothing to help as far as either cull sow quotes of the value of imported pigmeat is concerned.

Evidence of more confidence in finished pig prices in the months ahead helped by falling feed costs has been provided by a further improvement in the latest AHDB 30kg ex-farm weaner average, which now stands at £56.86/head with 7kg weaners changing hands at £42/head and more in places.

Cereal prices are continuing to ease, with ex-farm feed wheat quoted at £151.50/t on a spot basis.

Wheat prices on the futures markets have also eased with March quoted at £154.10/t and November at £145/t.

The latest UK trade data is indicating UK wheat imports have shown a significant decline this season, and maize imports are on the rise indicating better feed stock availability. Although global soya bean prices have been influenced by strong demand, they’re still trading at a significantly lower level than this time last year.

> 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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