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A Look at Life's Brighter Side

by 5m Editor
7 February 2009, at 7:15am

UK - Demand proved to be warmer than the weather with prices anywhere between a universal stand on and in some cases an extra penny or two was available from some buyers still short of pigs, writes Peter Crichton in this week's Traffic Lights commentary.

But much will depend on the spec (not just the price) with 140p to 90kg on a 14 probe in some cases better than 143p to 78kg on a 12 probe… i.e. “less is more”.

Evidence continues to emerge over further pig shortages in the pipeline indicated by sharply rising weaner values (see below) as well as virtually every United Kingdom abattoir operating at under capacity with hardly any cases of pigs being rolled, except in those parts of the country where killing throughputs have been affected by the awful weather.

The previously static DAPP is now a better reflection of the spot market by moving up from 131.38p to 133.34p, but is still an estimated 7p behind the equivalent spot quotes which were generally in the 140–143p region with lighter weights worth 4–6p above this.

The DAPP recalculation followed major concerns expressed by several producers, further details of which were printed on the NPA News page yesterday.

It is a point worth remembering that an incorrect DAPP does much more than just affect finished pig returns because virtually every weaner contract is also traded on a DAPP linked basis. The same also applies to some pig unit rents, bonus payments and the like.

Although European Union cull sow prices have held at roughly similar levels, the weakening € has taken 2–4p off quotes with export abattoirs opening their bidding at circa 112–114p/kg, but premiums are still available for larger loads more due to a shortage of numbers than any particular improvement in value.

The weaner market remains a reliable indicator of future pig supplies and although the AHDB 30kg ex farm average quote has now risen to £46.90/head, this is still some £2-£4 behind recent spot prices.

Just to cheer up the “glass half empty merchants” out there, this time last year the DAPP was 110.5p, spot bacon quotes were circa 100p, sows were worth 72p and the € was only worth 74p at a time when feed wheat was trading on an ex-farm basis at £176/tonne, so in the words of the Monty Python song “Always Look on the Bright Side of Life”!