The year ahead looks set to be “more positive” for the pig sector, offering greater price stability after almost two years of depressed prices and negative margins, according to Lily Hiscock, pigs specialist with Andersons, the farm business consultants.
“The shift in the £/€ exchange rate has narrowed the UK price premium compared to continental supplies – allowing export growth into Europe,” she states in the firm’s 2017 outlook publication. “In addition, exports outside the EU look set to improve, with the quantity exported to China in 2016 having increased by more than 10% (in volume terms) in comparison to the prior year.
“Chinese domestic pork growth is expected to be slow and as such the UK is in an excellent position to exploit this opportunity. Domestic prices are expected to be maintained at a higher level in 2017 than seen throughout early 2016, with increased exports contributing to a tightening of supply in the UK.”
Ms Hiscock goes on to warn, however, that although pig prices are expected to continue to improve, producers should be aware of changes in feed prices and consider booking feed forward, if it will guarantee a positive trading margin.
“Currency changes have already provided an uplift in UK cereal prices and protein prices look very volatile due to uncertainty over quality of supply and weather in South America,” she said. “It is anticipated that cereal prices will settle, due to the high level of stocks across Europe; however, protein prices should be watched more carefully.”