Signs are emerging that pig values could possibly be bumping along the bottom in price terms, but with an estimated cost of production of 145p/kg sellers of spot bacon, who have been getting as little as 130p in some places today, will be looking for a significant price recovery to put their margins back in the black.
The latest SPP lost another 1.63p and now stands at 152.35p, but this is still some 20p or so ahead of spot quotes at the bottom end of the market.
Most contract prices, which either include an SPP or weekly average price link, are in the 150p region, but are still well ahead of current EU mainland producer prices, which are averaging in the region of 107p/kg.
A mixture of subdued demand, abundant pig supplies coming forward and the ongoing Russian import embargo are all conspiring to put further downward pressure on prices, although a very slight upward movement in cull sow values which put on a penny today, may be signalling a slightly firmer outlook in Europe in the weeks ahead.
Another factor that producers need to take on board is the weight of slaughter pigs in the system – the average carcase weight for last week was as 82.22kg, indicating a backlog of pigs still in the system.
With Christmas only eight weeks away, producers should make every possible effort to put a few extra pigs on the lorry and get their weights down wherever they can – although contract and spot buyers are resisting taking any extra numbers (unless they are cheap).
As indicated above, slightly firmer sow prices might perhaps signal an end to the recent slump in pigmeat values, and the two main cull sow abattoirs are now operating at about the 80-82p/kg level, although EU demand still remains fragile.
A slight improvement in the value of the euro, which traded up 2% on the week, worth 78.96p on Friday, will also help a little as far as the pigmeat import/export balance is concerned.
Contract and spot weaner prices are continuing to operate on very much of a two-tier basis, and although the latest AHDB 30kg average looks fairly respectable at £50.43p, spot buyers are operating £4-5 below this in some cases. The latest 7kg average is also static and is currently holding at £37.66p, but a far cry from its value of more than £41 in May.
Feed prices have also tended to harden on the back of reports of weather-related delays to the US maize harvest, which has put upward pressure on wheat values with spot UK wheat traded up £3/t at about £110/t and LIFFE futures feed wheat prices were quoted at £121.50/t for November and £129.20/t for March 2015.
Hipro soya has, however, held at similar levels, quoted at £318/t ex-East Coast store. Rapemeal has also held at about £160/t.
And finally, the NPA is urging members who are unlucky enough to find themselves out shopping to check the recent reported fall in UK pigmeat volumes on the shelves, but with such a wide gap between EU mainland prices where producers are receiving an average of 107p/kg compared with UK values at a time when retailers’ margins are under pressure, especially as far as Tesco is concerned, it’s hard to see them paying producers more at a time when they’re trying to undercut their rivals at the retail end.
Further promotion of the UK product may be the way in which BPEX can persuade the wider British public to support the UK pig industry, even if this involves a promotional levy increase.
> 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