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Prices May Flatten Off

15 October 2012, at 7:34am

UK - Although finished pig prices have staged a steady recovery with Tulip moving up from 149p at the end of August to 158p now and the DAPP rising from 154.75p to 155.74p over the same period, evidence is emerging that European prices are starting to flatten and the latest German quotation has lost a couple of euro cents, writes Peter Crichton.

In real terms prices still need to put on another 10p/kg to put producers back into breakeven and it would be a pity if the current price improvement peters out, especially as the Christmas trading period draws nearer.

Shout prices are mixture of +1p and stand-on, but Cranswick disappointed sellers and failed to build on its 3p improvement last week by standing-on and is still bottom of the pile, whereas Woodhead continues to lead the way with a further penny increase and the latest league table now reads as follows:

First 162p (+1) Woodhead
Second 159p (n/c) Gill
Equal third 158p (+1) Tulip, 158p (+1) Vion
Last 157p (n/c) Cranswick

Fresh meat wholesalers are also reporting relatively quiet times on the high street and a common theme seems to be that consumers are wherever possible looking for cheaper lines and are out to save money rather than spend it; all of which could put further pressure on pig prices in the weeks ahead.

Spot bacon prices have also tended to level out with 163p being achievable, but it was difficult to get more than this except on a very tight spec. Lighter baconers and cutters are worth another 4p–6p above this, but only in relatively small volumes.

A slight improvement in the value of the euro which traded on Friday worth 80.59p compared with 80.30p a week ago has also helped to maintain cull sow prices at similar levels with the odd penny extra available on some regions where numbers are tight or big loads are available, but in the main cull sows were traded between 116p–120p according to spec.

Weaner prices are also continuing to stage a slow but steady recovery with the latest AHDB 30kg ex-farm weaner average quoted at 340.65p/head (+75p) and something of a sellers market may soon emerge as supplies tighten and finished pig prices provide better overall margins than they were a couple of months ago, but weaner prices still need to put on another 36- 38 to put breeders back onto an even keel.

A relatively quiet trading week on the cereal markets has also helped to restore a little stability, although compound feed prices are still well out of step with pig values but ex-farm feed wheat has lost a couple of 3s and is now trading at 3188.50/tonne compared with futures prices on the LIFFE market which saw November wheat 3200.50/tonne and May 2013 at 3205.50/t.onne

Spot soya prices have also eased with hipro quoted at 3404/tonne but still an expensive source of protein.

With a great deal of press comment about food inflation processors are hoping that it will be possible to persuade retailers to follow suit, although at the same time reports are emerging of consumers looking to save money and shopping at the bottom end of the market where BOGOF and other promotions will continue to predominate, which may put further pressure on producer prices at a time when they should be continuing to improve.