Peter Crichton’s commentary for November 27, 2015

“Black Friday” for Christmas shoppers also proved to be the case for pig sellers, and although the latest SPP only drifted down by 0.19p to stand at 126.28p, spot trades were significantly lower than this due to more sellers than buyers. As a result, prices at less than 120p were heard in some quarters for Red Tractor baconers.

Despite the relatively low cost of feed, tumbling pig prices did nothing to calm producers’ nerves, with several more difficult trading weeks, or possibly months ahead, until we see either a reduction in supply or better demand, coupled with an improving euro – which today traded at 70.39p on Friday afternoon compared with its value of 79.75p this time last year.

Cull sow quotes remained at generally positive stand-on levels, with export abattoir quotes about the 50p-plus mark, but once again, highlighting oversupply of pigmeat throughout much of the EU and the collateral damage caused to the UK pig industry.

On the plus side, however, in September pork exports were slightly higher compared with the previous year, and pig offal exports had a very strong month, up by 88% in September, with exports to China more than doubling to a record 3,500t.

The weaner market, unfortunately, remains no place for the faint hearted, with very few takers out there, with several batches of weaners still looking for homes. This trend is also reflected by falls in the AHDB weaner average prices, with the 30kg average slipping to £41.64/head and the 7kg average to £30.78/head.

Although 30-40kg weaners will be coming out on the market as finishers in February, which is not generally a good time to be a seller, 7kg piglets may face a slightly brighter future coming onto the market in the spring. We’ll see.

The latest Farmers Weekly ex-farm feed wheat prices, however, are painting a slightly better picture for hard-pressed pig producers, trading at about the £104/t mark, and the futures market has also remained quiet, with UK feed wheat quoted on the LIFFE market for January at £114/t and £120.90/t for July.

Improved growing conditions for EU winter crops across many European countries, which received the benefit of warmer than usual soil temperatures in October and November, should also help to boost the 2016 harvest yields – if nothing else goes wrong between now and then. There are, however, reports of adverse weather conditions in earlier months in some former eastern European countries, including Romania and Hungary, and with some dryer conditions in Poland, all in all, a mixed picture, but possibly a few more bears in the market than bulls.

And finally, more grief with the news that EU average reference prices are continuing their downward tumble from more than 105p in mid-October to less than 95p now.

In the pig world, when Europe sneezes, we shiver, and bearing in mind the very low value of the euro, this could be a chilly winter in financial terms.

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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