Peter Crichton’s commentary for October 2, 2015

It was another dull trading day as far as finished and store pigs were concerned, although there is a little bit more light on the cull sow market.

The latest SPP continues to slide and now stands at 130.07p compared with 155.1p a year ago, which represents a value drop of £18.75 per head for the average bacon pig . . . gulp!

As a result, those contract prices with an SPP or other index price elements are continuing to head south, and the same pattern is being repeated with spot pigs, although demand was once again reported to be very quiet, and spot baconers were trading in or around the 126-128p range, with some higher and lower than this according to spec.

The euro traded on Friday afternoon worth 74.22p, which is up on its value a week ago, and cull sow prices moved up by between 1-2p, with most selling in the 62-65p range according to spec. Nothing much to write home about, but at least better than it was a few weeks ago. Cast your minds to the same time last year when culls were worth over 80p/kg, and those of us with longer memories can remember cull sows trading at up to 120p and more in places. Those were the days!

Weaner prices continue to reflect the downward pressure on finished pig values, with some glass-half-empty characters suggesting that finished pig prices could continue to decline for the rest of the year. As a result, the latest AHDB 30kg ex-farm price has taken another knock, dropping from £45.21 to £43.51, although 7kgs staged a miniscule recovery to average £32.60.

With feed prices at their current lower levels, there may still be an opportunity for finishers to buy stores to earn a modest margin later on in the year, although the outlook for 7kg pigs some four to five months hence is difficult to determine, but normal seasonal patterns see finished pig prices rising from March onwards.

Cereal prices have staged a modest recovery, with ex-farm wheat now quoted at £103.50/t (although it’s hard to find many sellers) compared with £98/t a week earlier.

Futures prices are also indicating very slightly firmer cereal values in some cases, with November feed wheat quoted at £116.85/t, although January 2016 has eased back and now stands at £118.65/t, but these levels could easily change within the blink of an eye.

There are reports of US wheat prices increasing following the latest stocks report and palm oil prices have also been boosted by El Niño worries. Once again, there may well be a case of pig producers taking a little more cover if they can find it just in case prices move against them – half a hedge is better than no fence!

The announcement of the Basic Payments Scheme rate, which has been fixed at 73.129p, will do little to improve arable farmers’ margins, but comes as no surprise due to the relatively low value of the euro against the pound.

And finally, news that the European Union pig slaughtering increased 3.3% in the first half of 2015 underlines one of the reasons why European pigmeat prices have remained under so much pressure, not to mention the Putin blockade that continues to put downward pressure on the whole EU-wide food production supply chain.

But good news from even further afield, with reports that a sharp reduction in the size of the Chinese pig herd has caused wholesale prices to rise from £1.70/kg (carcase weight equivalent) earlier in the year to £2.50/kg now. Certainly a sweet rather than a sour price!

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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