Peter Crichton’s commentary for May 27, 2016

The pig industry is hopefully out of the critical care ward and heading for recovery, with prices continuing their recent rally on all fronts – apart from sows.

Contract abattoir weekly contribution prices appear to be leading the way in the right direction, despite a “short week” ahead, with the result that most of the big players’ weekly prices were in the 116p/kg (ouch!) to 120p/kg range, but spot prices are if anything a tad ahead of these levels, with spot bacon today traded in the 118p to 122p/kg region according to spec. Chinese demand is helping to lift pigmeat prices across Europe, with German pig prices up by 6c this week.

On the basis that the “hottest are the coldest”, the reverse also applies, and it’s interesting to see that some of those spot abattoirs prepared to pay significantly higher prices for pigs were those who were also at the bottom end of the price table during the tough times a few months ago. On an overall 52 week average basis, it will be interesting to see if spot comes out ahead or behind contract.

The SPP still has a fair way to go to catch up with the rest of the market, and moved up by 0.67p to 116.27p, but sellers are hoping that the 120p benchmark will be hit in the next few weeks – although this will still be below COP levels. Unfortunately, sow prices remain affected by a rise in the value of sterling and the Euro traded worth 76.11p compared with 77.75p a week ago and 79p at the start of May.

As a result, cull sow prices eased back by a penny in most cases, also reflecting that EU mainland pigmeat prices still have a fair way to go before normal service is resumed. Most cull sow bids were, therefore, in a fairly narrow price range between 58p and 62p/kg according to load size and spec.

Cereal prices will reflect hardening oil values to some extent, with slight increases on the futures market that saw July wheat traded on the LIFFE exchange at £106.50/t and January next year at £119.25/t. Spot UK wheat on an ex-farm basis currently trading at £104.70/t, but hard to buy at this level. Concern over very wet weather in the US could lead to a slightly bullish trend in this field, with more support being offered to Chicago wheat futures.

Weaner prices are also finally starting to reflect a better outlook for finished pig values, with the latest AHDB 30kg ex-farm average quoted at £39.22/head and 7kg at £29.27/head. Some of the more hard-nosed spot weaner buyers are finding supplies are dwindling and they’re having to put more money on the table to secure any extra numbers.

And finally, with the holiday season almost upon us, it’ll be interesting to see if tourist concerns over personal safety levels in Turkey and some of the North African countries will lead to an increase in tourism business in other parts of central and northern Europe, where terrorist threats are deemed to be lower. This could perhaps help to improve demand for pigmeat products, which are not widely consumed in some of the more “dangerous” areas?

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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: