Peter Crichton’s commentary for January 2, 2015

“Out with the old and in with the new”, but at more of a stumble than a brisk trot, with finished pig demand referred to as “quiet”.

It was, however, refreshing to hear that spot bacon buyers had been on the lookout for pigs in the past few days with quotes in the 130p/kg region, which is certainly an improvement on the situation during the past few weeks, but contract prices still provide a much better return to producers with the latest SPP now standing at 143.5p, but this makes a poor comparison with the value of the DAPP in January 2014 that stood at 169.93p.

Another plus point is the fact that very few pigs were “rolled” over the Christmas/New Year period, with the result that supply and demand are in balance, even if producers are not particularly enthused with some of the prices on offer.

The latest SPP has yet to be published, but should be available early next week, and the previous week’s price currently stands at 143.5p, but this index price still seems to be on a generally downward track.

News that German pig prices have fallen by a further four cents did nothing to help sentiment as far as cull sow values were concerned, coupled with indifferent performance of the euro which traded on Friday worth 78.12p, down a shade on its value seven days earlier of 78.31p.

Cull sow prices were anywhere between a reluctant stand on and down 2p/kg with the European pigmeat market, still suffering from the hangover of the Russian import embargo. As a result, most cull sow quotes were in the 63p to 65p/kg region compared with 103p/kg this time last year.

The latest AHDB weaner averages are also awaiting publication and the most recent prices we have to work on are the 30kg ex-farm average of £46.80/head and 7kg average of £34.68/head. A significant lack of finishing space is continuing to put weaner prices under pressure coupled with finishers’ concerns over slaughter pig values in the weeks and months head.

If, however, prices follow normal seasonal trends, we should benefit from something of a revival in finished pig prices once January and February are out of the way . . . we shall see.

Feed constitutes more than 60% of producers’ production costs and futures prices maintained their values over the holiday period, with January wheat quoted on the LIFFE market at £133.40/t and July at £137.70/t.

According to BPEX, feed costs in September 2014 were down by 11.8% compared with the previous 12 months and although this has provided some welcome financial relief for producers, unfortunately finished pig values were down by 8% over the same period so, in net terms, no major sea change in producers’ margins.

The latest COP estimates published by BPEX are in the 145p/kg deadweight region but, in net terms, not many producers are achieving this level of prices other than for Freedom Food standard pigs, which cost much more to produce in the first place.

And finally, publication of the 2013 pigmeat cost of production figures has proved to be something of a curate’s egg. Although GB production in terms of pigs weaned per sow per year has improved by 4% to 23.63, with a born alive 2013 average of 11.87 for indoor and outdoor herds, compared with the EU average of 13 with Denmark achieving a remarkable total of 15.4 pig born alive, which might help to explain how the Danish pig industry has remained so resilient despite poor prices over the years.

> 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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