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Larger Processors Much Stronger in the Market

by 5m Editor
24 January 2009, at 7:31am

UK - Plenty of evidence is continuing to emerge over the tightness of the supply chain as far as United Kingdom pigs are concerned, writes Peter Crichton in this week's Traffic Lights commentary.

The DAPP took a modest step up and now stands at 131.05p, but after an additional 4–5p DAPP premium, this is probably still 3–5p behind equivalent spot quotes.

Although some of the smaller fresh meat wholesalers commented that retail and catering demand had been very subdued, now that Christmas credit card bills are starting to drop onto the door mat, the larger processors were much stronger in the market and as a result there were very few cases of spot bacon being traded at less that 138p with bids in the 139–140p region reported.

Demand has been helped by the continuing rise in the value of the euro which traded on Friday worth 94.4p compared with 89p a week ago. That alone has put 6 per cent on the cost of imports and has added a similar amount to the value of United Kingdom pig exports.

Because of reduced demand from smaller wholesalers who are generally looking for lighter pigs, we are almost entering an era of the “one priced pig”.

The upcoming Jamie Oliver programme which is due to be broadcast on Channel 4 at 9pm next Thursday, should by all accounts underline the high welfare standards which apply to British pigmeat when compared with some of the mass produced intensively farmed imports that have long been the scourge of the domestic market.

This could well lead to a surge in demand for the British product and no doubt some buyers will already be sharpening their pencils ahead of trading next Friday.

The cull sow market has also recovered some of its composure, more due to an increase in the value of the euro than firmer prices abroad which throughout Europe have remained at similar levels.

Cull sow base prices were circa 115p with premiums available for larger loads and demand continues to be fuelled by a shortage of numbers which will no doubt be reinforced when the December 2008 Pig Census results are published.

The weaner market continues to provide an indication of more shortages in the pipeline with the AHDB ex farm average rising again to £45.71/head and a £50 weaner may soon be on the cards.

Recent announcements on the closure of Grampian’s Haverhill abattoir and also the Dalehead Foods Linton plant down the road had been anticipated for some while, but was still greeted with dismay when the news became public.

Unfortunately this is yet another sign of the continuing reduction in the size of the United Kingdom herd and clear evidence that domestic producers need to receive a fair price for the welfare friendly product if the whole supply chain is to remain intact.

Perhaps we will all be able to “ask for more” after the Jamie Oliver programme?