The Only Way Is Up

Although the SPP has gone up by 0.57p to 138.06p the picture on the other side of the Channel is completely different.

Continental pig meat prices have shot up with the influential German market recording rises of 18 Euro Cents this week, which is equivalent to 15p in real money and over the past three weeks, their pig prices have risen from €1.20 to €1.50 signalling that all of a sudden, the supply/demand balance has tipped in favour of producers after a long period of falling returns at rock bottom prices.

Although it will take quite a while for the SPP to shake itself out of its slumber, GB weekly contribution prices are also starting to rise which will feed through to the SPP with reports that most of the major players have increased their weekly contribution prices anywhere between 1p – 4p/kg and (hopefully) more of the same in the weeks ahead.

The backlog of overweight pigs is also starting to ease with one major processor reporting that they are taking full contract numbers and have been for several months and will be looking for more pigs going forward.

Spot bacon pig prices are also tending to harden, although one off loads at the heavy end of the weight scale are still quite hard to shift but lighter weights are meeting better demand with regular sellers’ prices moving ahead into the 112p-116p/kg region and more in places.

Although the price rises referred to above are a step in the right direction, the UK pig industry needs to be operating at sustainable levels for it to survive and much damage has already been done on this front as far as herd closures are concerned.

Cull sow values have in the past always provided a useful barometer indicating which way the market is heading with news that UK cull sow export prices for next week have gone up by 11p/kg, which is a bigger jump than most of those at Cheltenham and probably more rewarding.

If this trend continues, it should not be too long until cull sow prices regain some of their former composure with most traded today in the 38p – 41p/kg range.

The Euro traded slightly weaker compared with seven days ago slipping from 83.6p to 82.6p, but this did not deter buyers from looking for more culls for the export market.

No AHDB weaner prices are available this week, but with the prospect of improving pig meat prices buyers are showing slightly more interest in weaners, but the market has a severe challenge from the effects of the tragic events in the Ukraine putting cereal and protein prices through the roof.

Reports are indicating that 7kg RSPCA assured weaners are trading within a fairly wide range according to quality and numbers, anywhere between £32 and £36 per head in the main.

Please note that the following prices are provisional due to the turmoil in Ukraine. The latest prices available are indicating that UK feed wheat prices for April delivery have risen to £295/t and for September at £240/t, giving a rise of £77/t in seven days.

UK feed barley is also reflecting these trends with quotes of £250/t for April delivery and £225/t for September.
Protein values are also skyrocketing with Hipro soya deals provisionally agreed at £488/t for April and £464/t for November – April next year.

Rapemeal prices are off the clock at £382/t. With the Russian navy blockading Ukrainian ports, because the Black Sea region accounts for around 25% of global grain exports it is no surprise that the market is in complete meltdown in addition to the human suffering and loss of life taking place.

And finally, signs are emerging that in order for the UK pig industry to survive in the future COP linked finished pig contracts need to be an essential part of pig price contracts because of the unsustainability of the industry without prices tracking production costs.

At least the gap between UK and EU pig prices is starting to close, but there is still a long way to go before we get back in the black with indications that COP levels of around 180p/kg need to be achieved for Red Tractor pigs, and for RSPCA assured and outdoor finishers prices in this sector need to be 220p/kg or more to get some of the fifty shades of red off balance sheets in the times ahead.

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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: www.petercrichton.co.uk