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Good News, Bad News

by 5m Editor
11 April 2011, at 9:02am

UK - Producers have seen an improvement in weekly contract prices from several leading processors but weaner prices remain below production costs, writes Peter Crichton in his latest Traffic Lights commentary.

Although producers were somewhat underwhelmed by the latest modest improvement of the DAPP, which rose from 136.58p to 137.67p, they were slightly more heartened by better weekly contract prices which saw Tulip, Vion and Woodhead all go up by 2p and Cranswick making up for last week's stand-on position by lifting their quote by 3.5p and so the running order in the contract Grand National is Woodhead 144p, Tulip and Cranswick neck and neck at 141p and Vion still bringing up the rear at 140p.

Although spot pigs remain in very short supply, very few spot bidders were prepared to breach the 150p barrier, realising that there is no point in doing this as there were no spare pigs in the system anyway, so prices remained spread over a fairly wide band of anywhere between 140p–150p in the spot bacon market according to region and specification.

Recent further improvements in the value of the Euro which closed on Friday worth 88.3p, coupled with improving EU mainland manufacturing pig meat prices have also helped to harden demand for cull sows where sellers with large loads were able to negotiate prices in the 108p region and this sector is also benefiting from signs of more interest from other potential operators in the cull sow business.

Cereal prices remain bad news for the pig industry as a whole as the feed sector continues to track a bullish trend with ex-farm feed wheat quotes almost touching £200 per tonne and forward prices ahead of this.

As a result weaner buyers are still treading cautiously because they will bear the brunt of any further feed price rises and for this reason the latest AHDB 30-kg ex-farm weaner average has remained virtually static at £42.50 per head, which is significantly below breeders cost of production levels.

To finish on a brighter note, however, if the current spell of warm weather continues the nation's barbecues should soon be spluttering away which always seems to help the pig meat sector when we now tend to enjoy better prices if there is not an 'R' in the month!