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Prices Start to Move Up - Better Prices to Come

3 September 2012, at 9:11am

UK - For the first time since mid-June shout prices have started to move up rather than down as a belated response to sharply rising European mainland pigmeat values where prices have risen by 15 per cent over a similar period, writes Peter Crichton in Traffic Lights Commentary.

Although the DAPP has yet to react and currently stands at 150.39p, Tulip took the first small step by putting 2p into its weekly price which now stands at 151p, Gill was slightly more generous, rising by 3p to 153p, and all of the others matched the Tulip 2p rise, so the league table now reads as follows:

  • 154p Woodhead
  • 153p Gill
  • 151p Tulip
  • 149p Cranswick and Vion.

Spot buyers were much fitter than they have been for months and rises of up to 6p/kg were recorded with very few reports of spot bacon trading at less than 152p with shrewd sellers able to hit the 154p mark.

With signs emerging of better prices in the weeks ahead there was no rush to sell and with weights down some of the more canny producers will only sell what they have to, as they will need the benefit of further pig price rises to meet soaring feed costs, so the financial glass is nowhere near half full and remains more like half empty at present.

Despite the euro remaining virtually static over the past seven days, trading on Friday worth 79.39p, with extra cull sows on the market due to the financial situation, export abattoirs nudged their bids ahead by a further penny or so with the result that most sows were traded on a delivered basis within the 115p–117p range, which at least means that those producers who are unlucky to be forced to reduce herd size should at least be receiving a reasonable return for their culls with average sows now realising in the 3175/head region.

Weaner prices have also tended to stabilise with the AHDB 30kg ex-farm weaner average only a shade lower at 339.12/head, but if finished pig prices continue to move ahead a modest weaner price rally may be on the cards, but still probably not enough to put producers in the black.

Feed costs remain the major talking point with ex-farm wheat traded at 3192/tonne and November wheat on the LIFFE market still far too dear at 3206/tonne and July 2013 even more expensive at 3213/tonne.

With cull sow slaughterings on the rise there will inevitably be a reduction in slaughter pig availability next spring which could put further upward pressure on prices, but sadly this will come too late for many producers being forced to either cut herd sizes or clear out completely because of the imbalance between feed costs and pig prices.

Before we get too excited about today's increase in finished pig prices, one producer reminded me "plus 2p, only another 18p to go".