Peter Crichton’s commentary for September 6, 2013

Despite reports of falling pigmeat prices in Europe, UK demand remains firm due to a significant shortage of slaughter-weight pigs, but the gap between the remaining weekly contract prices and spot is still too wide.

Although Gills was bold enough to move its price up by another penny to 171p/kg, not for the first time Tulip disappointed sellers still on its shout price system by standing on at 168p, so the two-horse race now reads as follows:

Gills, 171p (+1p)
Tulip, 168p (nc)
DAPP, 167.95p (+0.23p)

Spot prices, however, have remained firm with buyers looking for pigs throughout the day, and most spot bacon was traded in the 174-176p/kg range according to spec.

Producers who have recently switched away from selling on a shout price basis to a mixture of 50% DAPP and 50% spot should enjoy a price rise next week, once the effect of higher spot values and a firmer DAPP filters through.

A note of warning, however, for those who are going through repricing arrangements is to try and avoid being solely DAPP linked as this could lead to a self-feeding inflexible price that either buyers or sellers will at some stage be unhappy with.

Some sellers are also including a “shout” element in their overall price calculations, but once again these are to be treated with caution as there could be a temptation to understate these to try and level the matrix price.

Ominous signs of easier prices in Europe were reinforced by sharp falls in cull sow values that dropped by 5p/kg this week and 130p/kg now represents the top rather than the bottom price, with most traded between 126-129p/kg, not helped by the euro that closed down on Friday trading at 84.25p compared with 85.35p a week ago.

With harvest virtually over, demand for weaners is starting to pick up as farmers look to fill empty yards for autumn finishing and the latest AHDB 30kg ex-farm weaner average price has now risen to £53.70/head with 7kg types trading in the £36-38/head region according to load size and Farm Assurance status.

Cereal prices have enjoyed a relatively quiet week with a slightly bearish trend with ex-farm wheat quoted at £149/t and forward prices on the LIFFE market saw November wheat traded at £155/t and £161/t for May 2014.

As previously mentioned, now might be the time for producers to get at little more feed cover to face the year ahead with one less thing to worry about.

> 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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