Pig prices slump below cost of production
© Rex High pork supplies have pulled spot pig prices below the average cost of production.
Analysts have reported spot market prices 20p/kg down on industry averages, while the standard pigs price (EU-spec) slid to 144.65p/kg on 6 December.
Bpex figures for the third quarter of the year showed average British cost of production was just under 144p/kg – and it was likely to have increased as grain prices have risen over the past two months.
The standard pig price has dropped 12% since late May as higher pig numbers killed at heavier weights have met with flat consumer demand for pork.
Russia’s ban on EU pork imports from January has flooded the continent with extra meat, adding more price pressure.
AHDB/Bpex market specialist manager Stephen Howarth said low feed prices had protected producers from falling farmgate returns but the decline had accelerated in the past two to three months.
“There is a pretty good possibility prices can go down a little while longer. The question is whether they hit the bottom and start coming back in the spring.”
Stephen Howarth, AHDB, Bpex
“Those selling into the spot market or a proportion of their pigs into it are already losing money and those on contracts will be getting close to that point,” he said.
“The normal seasonal pattern is prices fall away after Christmas. Chances are that is going to happen again this year.
“There is a pretty good possibility prices can go down a little while longer. The question is whether they hit the bottom and start coming back in the spring.”
European pig prices have fallen faster than in Britain, as continental producers were more exposed to Russia.
The UK’s advantage has been above 25p/kg all year and has now stretched to a record of more than 36p/kg.
National Pig Association chief executive Dr Zoe Davies said falling prices were a huge concern but the Russia ban was completely out of farmers’ hands.
She said getting more shoppers eating pork would help in the short term.
“We continue to benefit from a very healthy British premium. We are managing to more money from UK pork than they are in Europe and a lot of that is to do with retail commitments to British.