Peter Crichton’s commentary for July 17, 2015

Although the SPP moved up by 0.53p and now stands at 133.16p, prices are still well out of step with cost of production levels and the UK pig industry is being hammered as a whole by the very low value of the euro in the wake of the Greek financial crisis, dropping in value in the past seven days by 3.2% from 72.07p to 69.75p.

The spot bacon market has remained quiet, although there were reports of one abattoir looking to fill a few holes in the system and spot bacon was generally traded in the 131 – 134p/kg range according to specification.

Contract prices tied to the SPP have risen accordingly, but weekly announced contribution prices have generally remained at stand-on levels with the result that contract and spot quotes are more or less neck and neck at present.

A further run of better weather might help to stimulate barbeque demand, but the ready availability of cheaper foreign imports remains a constant challenge.

As expected, cull sow values took another knock and have moved from being terrible to awful with quotes back by a further 2p/kg and most cull sows were traded between 47 – 51p/kg according to load size and spec.

These dismal prices remain a financial deterrent to producers wanting to leave the industry, bearing in mind that this time last year sows were worth twice as much as they are now.

Although the latest AHDB 30kg ex-farm weaner price has improved slightly to £45.03/head, the 7kg average has dropped again and now stands at £32.49/head.

Weaner buyers and sellers are both between a rock and a hard place because, in most cases, weaner values are below COP levels, but the same applies to finished pig returns bearing in mind those finishers selling at 133p/kg will be unlikely to bank much more than 127/128p/kg after grade and deductions, but a £45 30kg weaner needs to net 135p/kg when sold to break even.

Probably the only brighter spot out there is as far as feed costs are concerned with the latest spot ex-farm old crop wheat price at £114.50/t compared with £128.60/t a year ago and prices are easing with the approach of harvest.

Wheat futures prices are also showing easier trends with November feed wheat quoted on the LIFFE market at £127.75/t and March 2016 at £130.90/t.

And finally, the news of an outbreak of H7N7 Avian Flu in Lancashire also comes as a reminder to the pig industry as a whole and the Government, in particular, to concentrate their efforts on ensuring biosecurity warnings are issued at ports and points of entry along the lines seen in Australia, New Zealand and the US, which make our efforts on this front look pretty pathetic.

If PEDv hits the UK it will be a case of the last one to leave turning out the lights.

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About The Author

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