Peter Crichton’s commentary for July 19, 2013

Although the DAPP has continued to improve and now stands at 168.84p, and spot buyers were looking for pigs on Thursday night, Tulip delayed the announcement of its weekly price until Friday morning, which according to their contract should be made on Thursday afternoon.

This was no doubt as a result of internal wrangling over where to fix the weekly price, but it looks as though the glass-half-empty brigade won this battle with the shock news that, despite scorching weather with good barbeque demand, and reports of German prices up by 5p/kg, the weekly shout price was cut by 2p.

As a result with the creditable exception of Gills, which is now almost at the top of the league table, all of the other major shout price abattoirs cut their weekly prices by a similar amount and the shout price temperature gauge now reads as follows:

Woodheads, 167p/kg
Gills, 166p/kg
Tulip, 164p/kg
Karro, 161p/kg
Cranswick, 160p/kg

Until the news of the surprise Tulip reduction hit the market, most spot bacon buyers were indicating they would probably have been prepared to buy in the 172-173p/kg region, but this later dropped to 170-172p/kg.

Carcase balance appears to be the problem; although all the barbeque cuts are selling wel, demand for legs and loins is easier with significant quantities being put into cold store.

The smaller fresh meat wholesalers were also reporting a slightly more selective demand and a curate’s egg type of trade, all of which may indicate that we could have seen the best of the recent price rally for now.

The irony is that the shout price system was initially introduced because some of the big abattoirs were unhappy paying historic prices for a forward product at a level that they claimed “did not reflect the market”.

While this may to some extent be true, the new system is even more detached from the market where spot bacon is trading at 10p/kg above contract levels, which is something of a smack in the teeth for loyal contract sellers, although during times of oversupply spot prices can slip behind contract, but often not to the extent of the 8-10p/kg differential ruling at present.

As another pointer to better European prices, as well as one more reason why shout prices should have stood on rather than dropped, the cull sow price moved up strongly by between 2-3p/kg this week with most traded in the 117-120p/kg region, and this was in spite of a slightly weaker euro that traded on Friday at 86.09p.

Weaner prices have also hit something of a plateau due to some concerns over finished pig values in the months ahead, as well as better supplies coming forward, with the result that the latest AHDB 30kg ex-farm weaner average now stands at £53.54/head, down a shade from £53.88/head a week ago.

7kg piglets were generally traded between £35.00-38.50/head, with Freedom Food standard weaners at the upper end of this range.

Grain prices are continuing to paint a slightly happier picture as far as feed costs are concerned, with November wheat now quoted on the LIFFE market at £167.55/t and January 2014 at £169.50/t.

Old crop ex-farm feed wheat is currently trading at £161.70/t, but barley looks much better value at £20/t below this.

On a more global basis, US maize and soya bean futures fell today, but wheat prices remained firm because of reports of more Chinese interest. Paris wheat futures were also showing a firmer trend.

And finally, East Anglian pig producers were relieved to hear that a planning application to build a large straw-burning plant in the centre of Suffolk was thrown out 16 to 1 by the Planning Committee. Although the applicant may well appeal, in the meantime this news will at least avoid yet one more straw-burning plant competing for material which is already unsustainably dear as far as pig producers are concerned.

Congratulations to Howard Revell of BQP and his supporters for their campaign to stop the plant being built, as well as those who funded planning barrister Jonathan Clay, who came up with a whole series of valid reasons why this proposal should not proceed.

> Suffolk-based Peter Crichton is an auctioneer 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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