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Downward Pressure from Retailers May Be a Blip

by 5m Editor
16 May 2009, at 4:40pm

UK - As predicted a steady run of price rises since the start of the year lost a little momentum today as far as the spot market was concerned, although contract base prices continue to push ahead on the back of a rising DAPP which now stands at a new high of 151.23p, according to Peter Crichton.

Decisions by Vion and Cranswick to cut their throughput next week due to downward pressure from the retail sector was the main reason for this, putting extra pigs onto the spot market with fewer takers.

Yet another Monday Bank Holiday in ten days time and the recent unsettled weather has done nothing to help, but the signs from Europe are that when the holiday influx starts demand should improve and the next price movement on the European mainland will be up and not down.

If this is the case then recent falls in the value of United Kingdom spot pigs can be seen as more of blip than a trend.

As a result contract sellers selling at DAPP-plus-4-5p were able to achieve prices in the 155–156p range and with outdoor and other niche contracts paying a further 4–5p; some were close to 160p and smiling all the way to the bank.

Spot bacon tended however to be between 150–152p, but with premiums still available very few sellers were forced to take less than 150p.

The euro has remained very static for the past week and closed on Friday at 89.3p and within a gnat’s whisker of its value a year ago.

Cull sow quotes are always a useful barometer of any fluctuations in European Union pigmeat prices in the weeks ahead, but they have remained largely static with stand-on being the order of the day with some bids as low as 108p, but mainly for small lots with larger shrewd sellers still able to command a premium in the 114p region.

The weaner market has also paused for breath with a certain amount of apprehension over rising cereal prices, but in spite of this the AHDB 30kg ex-farm weaner average is now standing at a respectful £55.79/head and inevitably significant premiums available for tail docked and vaccinated consignments.

Since the start of the year the DAPP has moved up by exactly 20p/kg putting most finishers back into the black after years of trading at a loss with a long (but possibly not hot) summer ahead, most in the industry are hoping we will have a reasonably stable selling period through the summer and into the autumn, rather than facing the wild fluctuations that have been such a feature of the industry for many years.

Hopefully "swine" flu will remain off the front pages due to all the turmoil in Westminster where we have “the best politicians that money can buy”.