Bridge Over Troubled Waters

Once again it is difficult to find anything positive to say about the UK pig industry or to a significant extent further afield with global prices also on the slide.

The SPP has nearly run out of steam, up by 0.24p to 160.90p, but it’s next move could be downwards.

Weekly contribution prices are expected to take a significant backward step with reports of them being cut by up to 5p/kg, which means that most will now be in the 142p – 158p range according to spec.

UK pig producers are seeing their margins cut to the bone by much cheaper foreign imports and although some regular spot sellers have been able to agree deals in the 145p-150p/kg region assuming space can be found, one-off spot loads will be worth little more than 135p, less in places.

The pound has, unfortunately, improved in value with the Euro trading at 85.17p compared with 85.6p a week earlier.

Despite this negative move, cull sow prices have in the main been between 55p-60p/kg, which is a very poor return for those producers now being forced to cull their herds due to financial pressures.

Weaner prices linked to the SPP remain firm, but if the index price starts to slip, weaner prices will follow on a downward slope.

The latest AHDB 7kg ex-farm average price is quoted at £39.75/head and now that harvest is underway, a reduction in feed prices could help to inject a little more interest from buyers than has recently been the case.

Cereal prices on the futures exchange saw July wheat traded at £207/t compared with £204/t a week ago for July delivery, with September traded at £179/t as against £176/t last week.

Barley continues to look better value trading at £160/t for August delivery.

Protein prices remain relatively dear with August – October Hipro soya quoted at £356/t and May – October next year at £334/t.

Rapemeal deals were agreed at £231/ for August – October.

And finally, producers are scratching their heads to see how the financial stability of the pig industry can be restored in the face of the following problems:

  • A chronic shortage of skilled and unskilled labour throughout the sector has cut productivity and volumes drastically
  • Covid problems have also hit volumes going through meat processing plants
  • Chinese and US pig prices are reported to be in steep decline
  • UK pig prices are being undercut by a wide gap between EU and UK values
  • Feed prices are too high compared with feed pig values
  • Competition from plant protein manufacturers is also chipping away at pig meat demand
  • ASF has been diagnosed in the German domestic pig herd
  • Abattoir breakdowns are more frequent playing havoc with pig marketing
  • Meat processors are suggesting that around 50% of abattoirs could be out of business in the next five years due to the economies of scale hitting margins in smaller abattoirs

Although there might be some light at the end of the tunnel, it will be a particularly long and tough journey to get there!

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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