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Peter Crichton

Peter Crichton’s commentary for July 25, 2014

PW ReportersBy PW ReportersJuly 25, 20143 Mins Read
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Despite ideal barbecue weather, UK demand remains sluggish, with loins hard to clear. Imported pigmeat is also presenting a significant competitive challenge, with a current gap of approximately 35p/kg between EU mainland and UK producer prices.

The DAPP continues to slide and now stands at 161.68p, compared with 168.81p this time last year. As a result, contract prices will continue to ease, and with significant numbers of contract pigs being rolled, spot buyers were, once again, spoilt for choice.

But there’s a wide difference between regular and irregular spot quotes and most of those who have established a weekly relationship with their spot abattoir buyer were able to trade around the 160p/kg mark, whereas sellers with extra spots on a sporadic basis were offered prices, in some cases, as low as 155p/kg.

However, on the basis that you must be “cruel to be kind”, some further declines in UK pigmeat prices might help to stimulate demand and also make UK pigmeat more competitive than it is at present.

Cull sow values have held at similar low levels thanks, in part, to the euro managing to maintain recent values, closing on Friday almost exactly what it was worth seven days ago at 79.11p.

As a result, cull sow quotes have generally remained within a fairly narrow 89-93p range, although buyers were prepared to take extra numbers where they were available.

Weaner prices have yet to react to much cheaper feed costs, with the latest AHDB 30kg ex-farm average quoted at £55.25/head and 7kg weaners at £40.58/head, but a wide gap is opening up between spot and contract weaner values with the former very hard to place due to a lack of space in the system and certainly more sellers than buyers.

With harvest throughout much of the northern hemisphere in full swing and bumper yields, cereal prices have remained under pressure at a four-year low, with LIFFE wheat quoted for November at £126.80/t and next March at £131/t.

Spot ex-farm grain price is also continuing to trade at a significant discount, with ex-farm wheat quoted at £114.20/t on a spot basis and barley now below £100/t in some regions.

And finally, an end to the Russian embargo on EU pigmeat imports would be a breath of fresh air for the industry, but following the tragic events in the Ukraine last week, it looks as though the re-emergence of the Cold War might put any resumption of trade on a long-term hold, which would be a loss for all concerned.

> 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

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