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A Chill Wind Blew Through the Spot Market

by 5m Editor
8 August 2009, at 6:09am

UK - Although DAPP held at an almost identical level of 155.09p, spot buyers were thin on the ground and something of a two tier trade has developed, writes Peter Crichton in his Traffic Lights commentary.

As a result most contract bacon pigs were traded in the 156–160p range on a DAPP base plus bonuses and something of a chill wind blew through the spot market where quotes tended to be between 142–145p with some regional variations, but much more of a buyer’s than a seller’s market.

Beef and lamb prices have recovered significantly, which is a good sign for the industry as a whole, but the value of the euro has slipped a shade closing on Friday at 85.1p compared with 85.6p a week earlier.

Most of the action was seen in the British cull sow market where a shortage of numbers rather than better European prices helped to maintain values which had earlier been predicted to fall.

Sellers with large loads could command prices of circa 116p/kg with all three cull sow abattoirs looking for extra throughput, but not always finding it.

The weaner market however continues to come under pressure reflecting a lack of finishing space and some unease over finished pig prices this autumn, especially if sold on the spot market.

The latest AHDB 30kg ex-farm weaner average has slipped again and now stands at 355.86/head, despite falling grain prices which should greatly improve finishers’ margins.

Now that the combines are rolling in many parts of the country grain stores are starting to fill with feed wheat, which was reported to be trading between 385- 390/t compared with 3111/t twelve months ago.

I remember in my early days in the livestock market an elderly farmer coming up to me to say that "one day young man the pig industry will be just like the chicken industry." At that stage most of the poultry industry had already fallen into a few large hands and there were few smaller independent growers or processors.

This was a time when there were a lot of small and medium-sized pig abattoirs throughout the country and the same applied to producers.

Sadly this prediction has proved to be right and we can now count on the fingers of one hand the number of major pig processors and the same applies to the big supermarkets who are their customers.

Any further loss of competition within the slaughtering sector would spell nothing but bad news for the industry as a whole, which is why every section of the supply chain needs to make a margin, but not at the expense of the other links in this chain. Food for thought!