Last Friday (19 August) was a very difficult day for pig sellers as far as contract prices were concerned, writes FW commentator Peter Crichton.
Although most spot buyers signalled they were likely to hold prices, Tulip‘s decision to drop its contract price by 2p to 145p/kg was followed by Cranswick cutting 2p to 143p/kg, Vion a slightly less harsh 1.5p drop to 143.5p/kg and Woodheads, still well ahead of the rest, also easing by 2p to 147p/kg.
Spot buyers on the other hand reported that at the commercial end of the trade UK prices were almost level pegging with imports and at least this helped to put something of a bottom in the market.
A difference of (say) 5p/kg between the Deadweight Average Pig Price and contract base prices provides a saving of up to £4/head to the buyer at the producers’ expense.
Spot bacon was mainly traded in the 140-145p/kg region, but with cereals at their current levels, 140p/kg still leaves many producers in the red rather than the black.
After all the financial turmoil in the UK stock market in the last few days it was a surprise to see the pound gain in value with the euro traded at 86.9p on Friday, compared with 87.57p a week ago.
The cull sow sector however remains busy with some producers culling herds and relatively stable prices despite an easier euro, with delivered quotes in the 106-109p/kg range.
Another challenge facing the industry is in the weaner sector where the Agricultural and Horticultural Development Board 30kg ex-farm price has fallen yet again to £43.04 and space remains very hard to find with most weaner buyers already full and others still occupied with harvest.
Grain prices are not doing the industry any favours either with buyers having to pay delivered prices of over £160/t for feed wheat off the combine and the LIFFE wheat futures market tending firmer with November quoted at £163/t and next July at £170/t.
In all sectors, however, a rapid return to profitability is what is needed if we are to avoid more producers heading for the exit door.