Peter Crichton’s commentary for January 23, 2015

It was another red-ink day for sellers, with the SPP continuing to slide and losing another 0.88p to stand at 140.82p and other factory and index prices following suit.

The gap between spot and contract prices remains as wide as ever, with some reports of spot bacon being sold for as low 120p/kg, although this was more the exception than the rule, with sellers of spot bacon to regular weekly outlets operating closer to 130p/kg. But prices remain under constant pressure from much cheaper and very competitive foreign imports.

The situation has been made worse by the continuing slump in the value of the euro, which traded on Friday worth 75p compared with 75.31p a week ago. This further reduction means that imports become even more competitive and the reverse applies to pigmeat exports, which mainly comprise cull sows.

As a result, cull sow quotes eased by another 2p/kg with most in the 57p to 59p range compared with 100p to 102p 12 months earlier.

Once consolation, however, is that EU mainland cull sow values appear to have held at similar levels and the reason for the UK price drop is currency, not market, related.

Although reports are starting to emerge of the possible relaxation of the Russian embargo on pigmeat imports from the EU NATO countries, the NPA has warned there’s still a long way to go before this becomes more universal. If so, there’s initially likely to be a resumption of exports of EU fifth quarter pork only from certain EU countries that don’t border other countries that have experienced African Swine Fever outbreaks or controls.

At the same time, the EU pigmeat market has to face the challenge of falling fifth-quarter export values in China, although reports that new pigmeat export markets are being opened up in India will be received with relief.

Although weaners remain in relatively short supply, the AHDB average values are continuing to ease, with 30kg ex-farm quotes at £46.12/head and 7kg at £33.80/head, both of which are, in many cases, less than the current cost of production.

However, with feed prices on the wane this might be the time for pig finishers with strong nerves to look at buying replacement weaners, which should come onto the market towards the end of April/early May when finished pig prices are normally in recovery mode.

Ex-farm spot feed wheat prices are quoted at £122/t, which is down a shade on last week’s levels, and futures prices are also painting a slightly more attractive picture with UK feed wheat on the LIFFE market quoted at £126.75/t for January and £136.50/t for November.

Fears of fresh conflict between Russian and Ukraine forces continue to add some support to grain market prices and we can only hope that, for the sake of the Ukrainian nation as well as the pig industry, AK47s are melted down into plough shares in the near future.

And finally, on a more positive note, reports are emerging that MEPs are insisting that processed foods that contain meat as an ingredient should be labelled with the country of origin and are asking Brussels to put the legislative framework in place to rebuild consumer confidence following horsegate and other food fraud cases. Apparently opinion polls of EU consumers have revealed that more than 90% consider it is important that meat origin should be labelled on all processed food products.

Fresh pork compulsory labelling was announced at the end of last year in the EU and comes into force this April, but it will be interesting to see if these new measures have a positive effect on European pigmeat prices . . . watch this space.

> 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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