Peter Crichton’s commentary for March 6, 2015

Although spot prices have continued to improve, unfortunately reductions in European mainland pigmeat values limited UK gains to 2-4p/kg, with the result that most spot bacon was traded in the 122-128p/kg bracket, which is still lagging behind contract prices despite further falls in the SPP, which has lost another 0.74p and now stands at 133.31p.

The pig market also continues to be affected by further reductions in the value of the euro, which was worth as little as 72.1p today compared with 72.7p a week ago, losing another 1% in value.

After several weeks of slightly improving prices, unfortunately cull sow quotes also came under pressure due to the weak euro, with most quotes trimmed by 2-3p/kg, with the result that cull sows were generally traded in the 60-62p bracket, representing a fairly miserable return, especially for those producers looking to restock with gilts. It now looks as though two sows need to be sold to match the cost of one replacement gilt, rather than the other way round, which has sometimes been the case in the past.

Weaner prices are continuing to come under pressure due to uncertainty over future finished pig prices, as well as further falls in the SPP, which is often used as a weaner price matrix, with the latest AHDB 30kg ex-farm weaner average slipping by more than £1 to £44.82/head, although 7kg values improved marginally to £33.83/head.

Probably one of the few bright spots in the market was signalled by further slight drops in cereal values, with March feed wheat futures quoted on the LIFFE market at £116.60/t and July at £119.60. Ex-farm UK spot wheat trades are reported at £113/t, but it’s hard to find many sellers at this level.

While cheaper feed prices will help reduce producers’ losses, many are still operating in the red rather than the black, and this trend is likely to continue unless we see a significant revival in finished pig values in the months ahead.

With the Easter holiday less than four weeks away, pig traders are hoping that we might see a spike in demand in the next few weeks, coinciding with recent reports that UK clean pig slaughtering numbers are 3% lower in January 2015 than the previous year. However, it would be better if any improvement in finishers’ margins was demand rather than supply led.

> 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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