As the song title suggests, some major price changes are on the cards and although the SPP which is notoriously slow to react only moved up by 0.04p to stand at 138.10p, the picture on the other side of the Channel and beyond is completely different.
The latest influential German producer price continues its sky rocketing ascent putting on a further 24 Euro Cents this week, to stand at €1.75, which is equivalent to approximately 146p in our money.
Cull sow prices which are seen as a barometer for pig meat values throughout the EU have taken a huge jump and a weaker Pound is also finally working in producers favour and as a result the Euro improved in value from 82.38p to 84p.
UK weekly contribution prices have also shot up with the major players up by 12p-16p/kg between 148p – 150p/kg, but this increase will only directly benefit those producers on this type of contract.
Although the spot market is still over supplied with heavy pigs, at least they are worth more than recently, although some spot buyers have been slow to react and are still offering prices as low as 100p/kg in places.
Regular sellers should be able to command a significant premium over and above this figure, but they are still a long way below the SPP.
A 20p/kg surge in cull sow prices has meant that export buyers were prepared to pay in the 58p – 61p/kg range, which translates to a per head figure for an average sow in the region of £80 and heavier types exceeding £100.
The indications are that there is still room for further upward movement in this sector providing that the black hole in pig numbers throughout Europe continues to get larger.
Weaner buyers have yet to digest all the changes taking place in pricing arrangements, but unfortunately however high the pig price climbs it still needs to somehow overtake COP levels and as a result no major changes are expected in weaner values until the industry has a clearer idea of the implications of feed costs also going through the roof.
Currently RSPCA assured 7kg piglets have in the main remained at similar levels between £32 – £37/head, but buyers with a good set of crystal balls could soon be entering the market but still on a fairly hesitant basis until a clearer picture of the whole feed price scenario has been absorbed.
Please note that the following ingredient prices have to be treated with caution in a highly volatile market.
The latest indications are that those producers who locked into feed prices earlier on will need to keep their contracts in a bank vault, but the most recent signs are that feed wheat deals for April are in the £298/t region and for September at £250/t.
Spot ex farm UK feed wheat prices have averaged £283.30/t in the previous seven days and could exceed this level when next week’s figures are published.
Futures prices for feed barley are trading at around £285/t for April and £235/t for September.
Protein values are also off the clock with Hipro soya deals reported to be agreed at around £524/t for April and £510/t for November – April 2023.
Rapemeal values have also surged from £377/t seven days earlier to £430/t for April.
And finally, at a time when the whole global economy has been shaken to its core by the tragic events unfolding in Ukraine, UK pig farmers also need to find a way of surviving and returning their units to some form of sustainable level of output.
But currently with average Red Tractor COP levels of around 190p/kg compared with a mere 140p/kg for finished pigs this translates to a loss of around £45 per finished pig produced, which is completely unviable.
Outdoor pig breeding RSPCA assured units are being hit even harder with very high additional costs putting their COP at around 225p/kg. Changes to existing finished pig contracts will also need to reflect COP levels.
Because of the slow moving nature of the SPP, pig pricing will take a long while before it catches up and producers are suggesting that a processor funded 50p/kg ‘top up’ payment is urgently needed to keep businesses afloat until the gap between income and expenditure has been narrowed.
More questions than answers, but at least UK and EU pig meat prices are starting to move in the right direction, but it still may well be a case of too little too late.
