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Peter Crichton

Peter Crichton’s commentary for September 5, 2014

PW ReportersBy PW ReportersSeptember 5, 20143 Mins Read
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The steady fall in finished pig prices looks to be bottoming out and there are even signs of some of the smaller fresh meat buyers prepared to put a penny or two more on the table in places.

Although the DAPP has eased again and now stands at 157.47p, most spot bacon quotes were holding with a minimum of 150p/kg available for those with extra pigs to sell, but contract prices tied to the DAPP, SPP or the Duckworth Lewis method are continuing to follow a slight downward track.

A miniscule improvement in the value of the euro which traded on Friday worth 79.43p, might also help to arrest any further price slides as far as imported pigmeat is concerned, although wholesalers have been commenting that EU mainland pigmeat, which can be purchased ex-head and ex-feet at about 150p/kg delivered, still provides a very strong and competitive challenge to the UK equivalent.

Cull sow prices have always provided a ready barometer of European pigmeat demand and these are still anchored at very low levels, with the two main buyers quoting prices in a relatively narrow 92-94p/kg range.

A lack of finishing space remains a major problem for the industry as a whole, and as a result, weaner prices remain under pressure with the latest AHDB 30kg ex-farm average quoted at £53.75/head and 7kg weaners at £39.24/head.

Spot weaner trades have, however, been reported at £2-4/head below this, and most of the AHDB averages mainly refer to contract rather than spot trades.

For those with a little courage and money in the bank, now might be a good time to buy weaners, especially in the face of falling feed costs.

UK feed wheat traded for November on the LIFFE market at £119.20/t today, and the latest Farmers Weekly ex-farm spot feed wheat price is quoted at £110/t.

The latest estimates released by the International Grains Council have forecast an increase of global wheat production to a record 713.4 million tonnes (mt) from 702.3mt following the expectations of larger crops in Russia, the EU and China.

According to BPEX, hipro soya meal prices (ex-store) on the East Coast for September delivery were £340/t, up £6/t on the week, and rape meal prices (ex-mill) were £166/t, up £3/t. There’s a mixture of bearish and bullish tendencies in the cereals and protein markets respectively.

And finally, the effects of the Russian meat embargo are continuing to put downward pressure on the whole of the European meat market. Calls for private storage aid, at least for fat and waste products, might at least help to put a bottom in this sector of the market and benefit the cull sow and heavy manufacturing grade pigmeat sector to the benefit of all EU producers.

> 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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