Here Comes Trouble

Although the SPP put on another 0.2p to stand at 165.5p, EU prices are continuing to head south with the influential German producer price slumping to the tune of 13 Cents.

It now stands at €1.47, which is equivalent to 132p /kg in our money, compared with 160p/kg a few months earlier and the situation hasn’t been helped by a fall in the value of the Euro which traded today worth 89.62p compared with 90.21p seven days ago.

Indications are that most of the weekly contribution prices will hold at present levels within a wide range between 155-166p although downward pressure is to be expected in the weeks ahead and may also be reflected in monthly contribution prices when they are next announced.

However, the spot market is no place for the faint hearted with most buyers having more than enough pigs without looking elsewhere.

Spot pigs are now lagging behind the SPP to the tune of several pence. UK wholesale pig meat prices have also taken a tumble with the value of legs falling sharply and shoulder meat also down by 30% in some cases.

Demand for cull sows is still affected by EU abattoir closures due to Covid -19 restrictions, which have slashed the volume of cull sows going to Europe at a time when finished pig numbers are also building up.

Those sellers who have been able to find space could be looking at prices of less than 55p and below, which is in contrast with their value of 125p in March. Some producers are electing to re-serve sows rather than take a massive financial hit now on the basis that it is better to travel hopefully than arrive.

Weaner prices are currently reasonably firm but once the implications of falling finished pig prices in Europe filters through these could also be heading south. The latest AHDB 30kg ex-farm weaner price is quoted at £59.36 and the 7kg average is £43.14.

However, rising feed prices and uncertain finished pig values will continue to nibble away at confidence in this market if the current trend continues.

Wheat prices are continuing to harden with UK feed wheat traded at £171 for September and barley at £139 for the same month. Spot UK feed wheat is quoted at £157.07/t ex farm.

Proteins are also slightly firmer with hipro soya quoted at £304/t for August-October 2020 and £303 for May-October 2021.

On the other side of the pond, Chicago wheat futures closed up $7/t due to a reduction in global availability and Chicago maize futures are also tending dearer following reports of hot and dry weather conditions in the mid-west.

And finally, during these challenging times, the Chinese and Asian pig markets remain a valuable outlet for UK producers especially at a time when global pig prices are coming under downward pressure.

Touch wood UK pig prices seem to have generally remained clear of Covid-related abattoir shutdowns which can play havoc with supply and demand situations and until some of the major European players are able to re-open their plants and comply with Covid regulations, cull sows will continue to be very hard to clear and could to some extent drag down the price of manufacturing pig meat too.

Hopefully, the UK pig industry will be able to rise above these and comply with a rising tide of Covid related paperwork and restrictions as they have done up to now.

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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