Where Do You Think You Are Going? (Dire Straits)

Although the latest SPP has risen by a record 5.28p to stand at 146.99p, the recent major rally in EU pig meat prices looks to be levelling out but pig values are still miles adrift from where they need to be to catch up with the cost of feed on both sides of the Channel.

UK weekly contribution prices are also continuing on an upward curve with the big players going up by between 5p and 10p/kg with the result that most weekly prices are now between 168p and 190p, but it could still be a case of ‘too little too late’ as far as many hard pressed producers are concerned.

Spot bacon prices are also continuing their steady recovery with regular sellers able to achieve prices at or close to 130p/kg, but demand is still reported to be ‘fickle’ (or something that sounded like that) with consumers cutting back on their soaring shopping bills, which is not doing the pig industry many favours with retail prices still relatively high when compared with farm gate values.

Cull sow values which have always been a reasonably accurate barometer of pig meat prices throughout much of Europe are tending to level out with export sow buyers generally holding their prices at similar levels to last week between 74p-78p/kg, although the value of the Euro has improved trading at 84.22p compared with 83.38p a week ago.

The sharp rise in the SPP has however benefitted weaner producers by putting up contract prices linked to the SPP. Although no AHDB averages have been published once again this week, contract 7kg RSPCA assured piglets are in the main trading between £32.50 – £37/head according to contract terms, but space for spot weaners still remains scarce with buyers reluctant to make long term commitments until they have a better idea of how the pig price/feed cost equation will affect the market.

Unfortunately feed prices continue to be dominated by the war in Ukraine, but at the time of preparing this report very little had been achieved in the way of peace talks and for this reason the cereal and protein markets remain highly volatile.

The latest figures available are indicating that feed wheat futures for May delivery are being agreed in and around £310/t and for September at £264/t.

The weekly ex farm feed wheat spot average value remains high at £298.90/t and barley futures prices are also extremely bullish and neck and neck with wheat at £309/t for May delivery.

In the absence of peace breaking out in Ukraine Hipro soya prices remain exorbitantly high with May at £496/t and longer months saw November – April 2023 at £479/t. Rapemeal is trading at similar levels on the week at £425/t for May – July.

And finally, despite pig prices across the EU having staged a huge recovery from 1.20 EUR in February to 1.95 EUR today this may still be a case of too little too late for producers on both sides of the Channel, unless there is a radical drop in all production costs and pig meat values also continue to rise.

Unfortunately all the signs are that the war in Ukraine is far from over and some reports are indicating that up to 40% of the massive cereal crops grown in Ukraine may not be successfully harvested this year with the implications this also has on future cropping.

Until some sort of normality returns to the whole region including Russia, it remains difficult for members of the pig industry to plan ahead especially as far as feed buying is concerned.

To counter this, producers are suggesting that finished pig contracts must include a COP element to help restore a sustainable situation.

In the words of Edward VIII, ‘something must be done’. There are also several other elephants in the room and enough to start a circus with, including Covid, labour shortages following Brexit and the growing threat from African Swine Fever heading this way, to mention just three.

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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