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Peter Crichton

Peter Crichton’s commentary for November 20, 2015

Peter CrichtonBy Peter CrichtonNovember 20, 20153 Mins Read
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It was another extremely difficult day for sellers and, despite the SPP rising by a modest 0.22p to 126.47p, spot and contract prices have continued to head south, but only by a copper or two in most places, although cull sow values took a much bigger hit.

As a result, most spot bacon was traded in the 120p to 125p/kg range according to spec, but with some big kills in the week ahead, hopefully most pigs have found homes, albeit at less money.

The cull sow market has always provided a ready barometer of the health (or otherwise) of the EU mainland pig industry, but was very much on its sickbed today with a whopping 5p/kg lopped off sow prices and, on this occasion, only a very small proportion of this fall was due to currency changes – with the Euro worth 70.05p on Friday afternoon compared with 70.07p a week.

Breeding sow operators are, therefore, between a rock and a hard place with some unable to afford to keep sow numbers at current levels, but also unable to take such a low cull price, bearing in mind the much higher cost of gilt replacements and we could soon be moving into “buy one get two free” territory.

Most cull sow export prices were in the 50p/kg region (£70 per sow net) compared with 83p/kg this time last year . . . those were the days!

Weaner prices are also continuing to reflect the lack of any clear direction in finished pig values in the weeks and months ahead and, as a result, the latest AHDB 30kg ex-farm weaner average has drifted lower to £42.14/head and 7kg weaner average stands at £31.52/head but, as previously advised, a very wide gap between contract and spot deals. Those producers who are fortunate to have a cast iron weaner contract should keep it in a very safe place and away from naked flames.

Cereal and protein prices are, however, painting a slightly brighter picture for pig producers with the latest Farmers Weekly ex-farm spot feed wheat quote of £102.40/t, and futures quotes ending another relatively quiet week with January feed wheat quotes on the LIFFE market at £114.50/t and May at £118.40/t.

Rape meal is trading at a four-year low of £150/t and Hipro soya is also easier at £253/t ex-store.

Reports of a Ukrainian cap on wheat exports has done nothing to bring the bulls into the market, because the size of the cap is currently above total exports and current forecasts for 2015/16 exports.

And finally, more bad news in connection with the imbalance between retail and producer pork prices with the NPA reporting that the retail price of pork has fallen to its lowest level for 11 years and that those further up the supply chain are grabbing a higher proportion of pork margins at a time when producers’ bank accounts are continuing to slip further into the red.

According to AHDB reports, retail prices received by producers have now collapsed to 34%, which is their lowest level since 2004, coupled with EU pig prices falling for seven consecutive weeks. And there’s increasing concern over pork being “dumped” on the UK market by our EU partners at a time when consumer demand for pigmeat continues to be subdued.

Despite supporting Narwich, perhaps Jimmy Butler’s wise proposals some long time ago to increase promotional support of our product at a time when the NPA is reporting much larger volumes of non-UK gammons appearing on retailers’ shelves in the run-up to Christmas would be worth looking at again?

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Peter Crichton

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