Weaner rise brings profit for efficient
By Simon Wragg
THE sharp rise in weaner prices reflects short supply rather than confidence in the prospect of better-finished payments. But even at current levels, efficient producers should make a profit.
Although rising slowly in January, weiner values gained pace in February to stand at £24 a head in the east and between £26.50-£27.50 across the west and north. Meat & Livestock Commission figures suggest prices have crept to a top of £28.50 last week (with an overall average of £25.92).
Entries through markets mirror the fall in numbers available from weaner suppliers. These are down considerably with the loss of specialist store pig producers early in the industrys current crisis culminating in a further 7% contraction in the UK breeding herd last year.
"Were certainly seeing fewer entries," comments Peter Woodall of Malton-based Cundalls. "But the weaner price is being dragged by the rise in finished pig prices. Some see it as the end of the crisis, but it could be another false dawn."
Typical of venues, 12-week-old weaners – weighing 30-32kg – were trading at about £27 each, up almost £15 a head from the end of last year. At these levels, reasonably efficient finishers should still make a margin, albeit £2-5 a head, suggest consultants.
According to Warks-based pig adviser Bernard Peet, it would take at least 12 weeks to get a 32kg weaner to a bacon weight of 95kg liveweight with a daily weight gain of 800g. "Better units will do it with feed costs of £18-20 and overheads of £5 a pig. Given a 74% killing out percentage, they need to achieve 85p/kg to make a margin of £5 a head."
While he is optimistic that pig prices could strengthen in future, he adds that the finishers potential margin could be eroded significantly if performance – notably feed converted to weight gained – is poor.
However, although the recent shift in weaner values is seen as a strengthening of the market, average spot values in some areas are still lower than a year ago, suggests the MLC. While January averages were up on a year earlier, Februarys were lower – particularly in the north and west where they were down by £3-4 a head. In the east these were up by £3 each. *
Organic rules lift sales values
RULES governing which dairystock from farms clear of BSE can be used on units undergoing conversion to organic status is helping underpin some sale values.
At last weeks dairy sale at Frome, auctioneer Chris Reeks saw the dispersal of 165 commercial Holstein Friesians come under the hammer to achieve a premium estimated at £40 a head for cattle sold to organic enthusiasts over similar entries taken by conventional farms.
Soil Association rules state that farms in conversion can buy replacement heifers and cows from any holding as long as they are not the progeny or a cohort of an animal that has been a BSE case. For organic farms the ruling is tighter, only allowing stock to be taken from units clear of BSE since Dec 31 1993.
"Being clear of BSE is certainly helping sales. There are a growing number of farms able to claim the required status and premiums from organic buyers certainly help the trade with more dispersals expected this spring," said Mr Reeks.
With the push of in-conversion contracts from dairies hitting the headlines in recent weeks, interest is growing. According to the Soil Associations John Parslow more auctioneers are contacting the organisation to establish whether cattle coming up for sale can claim suitability for organic units.
"Certainly, the added attraction for organic converters results in a large company of purchasers, and a good early season trade," adds Mr Reeks.
The entry from R Napper & Son of Pilton, Somerset achieved yields of 7000-litres and averaged £435 (£65 more than the vendor had expected) to top at £890 for a third lactation cow by Donarini Chairman Valid.
However, over thirty months scheme compensation continues to put a floor in the market. With last months revaluation of the k with a weakening of sterling, it now stands at £274/cow (up £3 on February). *
Clean quota hits trading
QUOTA trading has slipped back again this week as traders report a reasonable amount of clean quota is available, while Intervention Board figures show milk production has fallen.
According to ADAS, the clean quota trade has seen almost 2p/litre wiped off values for 4% supplies (down to 32.5p/litre) since last week. Used quota has also fallen back, now down to 20p/litre with producers showing no sign of urgency in wanting to trade at this price.
For those looking to back-to-back quota deals to cover milk production, trade has also slowed considerably with the difference between clean and used values remaining too great to justify the expense. Likewise, interest in forward leasing for the next milk years has been slow, with 4% supplies being quoted at 4.5p/litre.
Coincidentally, weekly milk production has also slowed to 243m litres (unadjusted for butterfat) for the period ending Feb 19, according to IB provisional figures. That is almost the same as a week earlier (actually down by about 1m litres), but down by 10m litres for the same week a year earlier. *