Peter Crichton’s commentary for October 3, 2014

A difficult day in the office as prices continue on their slippery downward slope, with spot bacon prices losing another 5p and the final DAPP published on its demise quoted at 155.10p compared with the fledgling Standard Pig Price (SPP) slightly higher than this at 155.21p.

Spot bacon buyers were few and far between, and those that were prepared to bid were offering between 135p and 140p, although more money was available for “regular” spot sellers.

Contract sellers were, however, able to obtain premiums of between 15p and 20p above spot, with a whole variety of different price matrix combinations now available, including not only the SPP, but the weekly Trib and what are now known as “Contribution Prices”, that is self-announced weekly prices.

Sharp falls in mainland European pigmeat values seem to be the major culprit, with the ongoing Russian import embargo causing further stockpiles of meat at a time when it should be travelling freely to Comrade Putin and his people.

An end to the Russian embargo or the introduction of Private Storage Aid would work wonders, but until that happens, prices are likely to fall further, with German producers now receiving little more than 100p/kg deadweight, which demonstrates why it’s so difficult for UK pigmeat to compete with much cheaper European imports.

Although the euro managed to hold at similar value on the week, trading on Friday worth 78.28p, sow prices are also continuing to tumble, losing another 4p today, with quotes now between 78-81p/kg and at their lowest level for many years.

Weaner prices are continuing to suffer from finishers’ concerns over the forecast values of slaughter pigs early in the new year, with the latest AHDB 30kg ex-farm weaner average dropping to £51.75/head and 7kg at £37.94/head, and once again it’s worth remembering most of the AHDB pigs quoted are for contract deals and spot prices can be lagging anywhere between £2-4/head lower than this.

Cereal prices seem to have hit something of a plateau, with the latest ex-farm spot wheat price a tad firmer at £100.80/t and LIFFE quotes for feed wheat futures £111.75/t for November and £117.75/t for May 2015.

And finally, despite the benefit of much lower feed prices compared with 12 months ago, producers should be under no illusions about the serious situation facing the pig industry at present. In some cases, sellers will be operating at a loss because the effects of much lower wheat and soya prices have yet to filter through the system as a whole, but cashflows will be instantly hit by much lower slaughter and weaner pig returns. Perhaps BPEX should be concentrating on more point of sale pigmeat promotion to see if demand can be stimulated at the retail end in the run up to Christmas?

This could reopen the discussion over an additional promotion levy, which a number of producers feel would be worthwhile on the basis that the industry should not hide its light under a bushel. Our welfare standards are among the highest in the world, and pork quality continues to improve, so we need to make sure this hard-hitting message is spread far and wide.

> 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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