Peter Crichton’s commentary for January 24, 2014

Contract and spot prices have continued to slide following the normal pattern towards the end of January/early February, with the DAPP dropping to 167.29p following future uncertainty over the future calculation of the DAPP, which remains a vital industry price.

Spot bacon pigs have also eased significantly, although fairly light numbers were available with most pigs still staying on contract and as result spot bacon quotes were within a very wide range of anywhere between 156p/kg from abattoirs that didn’t really want them in the first place, to 166p/kg from those that did.

Although a stronger pound pulled back the value of the euro during the middle of the week, by close of trade on Friday it was worth 82.96p, which is exactly the same as its value seven days earlier.

A very slight improvement in some EU mainland pigmeat prices has also helped to arrest the recent fall in cull sow values, with most buyers quoting in the 100p/kg region with a penny or so more available for larger loads.

A return to firmer pigmeat prices throughout the whole of mainland Europe would be welcomed by the UK industry as a whole, because cheap pigmeat imports are still undercutting the home market by well over 20p/kg and remain a potent threat to the domestic prices.

The latest AHDB 30kg ex-farm weaner average has eased a shade reflecting unsettled finished pig prices and the 30kg average is now quoted at £55.71/head.

Further falls in feed values should, however, help to improve producer returns with ex-farm feed wheat quotes continuing to drop, and futures markets also signal easier trends in the months ahead with July at £155.50/t and November at £144/t.

The main talking point however has been over the future of the DAPP following decisions by Cranswick and Karro to cease submitting their price data for the time being.

At the time of preparing this commentary, hopes are rising that significant price information will still be available to allow the DAPP to continue in its present form and remain an essential index price used throughout the industry as a benchmark, not only for finished pigs, but also for weaner and gilt pricing information.

But in the longer term, a two-tier DAPP could emerge providing a more accurate comparison of the difference between Freedom Food and Red Tractor prices, which could be more acceptable to processors.

> 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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