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High Contract Prices Take the Shine Off Spot

by 5m Editor
4 July 2009, at 9:31am

UK - According to Peter Crichton, the recent heatwave seemed to knock some of the stuffing out of the market, although DAPP continues to move upwards and now stands at 154.59p providing an excellent return for those producers on DAPP-plus contracts.

Because producers were keen to put as many pigs on contract as they could, some of the larger buyers had no need to venture into the spot market to top up supplies with the result that a gap is starting to open up between spot and contract quotes.

The hot weather has affected the meat market as a whole with beef and lamb bearing the brunt of reduced consumer demand and we will have to hope that pork moves higher up the menu.

Spot bacon quotes today tended to be in a fairly narrow 150–155p band according to specification with lighter weights only worth a few coppers more providing yet another incentive for producers to take their pigs to heavier weights and also to benefit from relatively cheap feed availability.

The euro has remained largely static this week and closed on Friday worth 85.6p.

Mixed reports of an unsettled continental pigmeat market continue to filter through and cheaper pigmeat imports remain a threat to the market as a whole, which is why an improvement in the value of the euro would help to redress the import/export balance on this front.

Although on the continent cull sow prices have also remained static because of the shortage of numbers on this side of the Channel, buyers were if anything keener than usual to secure dwindling numbers with the result that very few bids of less than 110p/kg were on the table and shrewd sellers could haggle several pence above this for larger loads.

The weaner market is however continuing to reflect a fairly optimistic outlook for finished pig prices in the early autumn with the AHDB 30kg ex-farm weaner average quoted at £57.78/head, but many more buyers than sellers are operating in this sector of the market at present.

Bearing in mind we are right in the middle of the Wimbledon/strawberries/no-R-in-the-month triangle, at the start of the year many of us would have traded our right arms (and left ones as well) to be at this level six months down the line.

One additional threat possibly facing the industry are reports that various continental pig traders are attempting to import weaners into Britain to capitalise on much higher prices ruling over here.

Although we should all embrace free trade within the European Union, any producers who become involved in this trade should also look at the health risks to the British pig herd as a whole. Imported weaners can carry different strains of PRRS which are harder to identify and potentially much more serious than ours.

In addition there are several serious strains of APP in Europe that do not exist here. MRSA is also high in Holland and pig flu could also be an issue.

Any disease transfer of this nature could have serious implications for our British breeding company exporters and for pigmeat exports as a whole. Currently Britain is seen as having an elevated pig health status because of the stretch of water that divides us from the other 26 European Union countries where an outbreak in any one of these could effectively end up in our laps.

It is also worth remembering that many of the exotic and other serious pig related diseases that have hit our industry over the years including classical swine fever, foot and mouth, SVD and Aujeszky’s, not to mention “Man Flu”, have all originated abroad.