16 August 2002

Pig price on Continent settles

CONTINENTAL pig prices appear to be bottoming out, bringing some hope that UK values have stabilised, too.

The past few weeks have seen some steep market falls, especially in the Netherlands, after last months MPA hormone scandal. Initially, this led to a slight firming, as movement restrictions were imposed on over half the countrys pig farms. Finished pigs were quoted at k1.18 /kg (74p/kg) in the middle of July, on a par with year-ago levels.

But by the first week of August prices had slumped by 24% to just k0.9/kg (56p/kg) as supplies came back on stream. "This, combined with the closure of the Italian market, which takes between 25% and 30% of all our exports, led to the collapse," said Albert Vernooig, economist at the Dutch Livestock Products Board (PVE).

But this week has seen a welcome upturn in the Dutch market, to k1.08/kg (68p), after the resumption of Italian trade.

And in Denmark, Karsten Flemin, economist at Danske Slagterier, believes the worst may now be over. "Production throughout the EU is pretty stable, and once the processors get back to work after the summer holidays we may see some improvement," he told FW.

Certainly Danish pig producers have had a torrid time. "At the start of the year the pig price was 10kr/kg (85p), climbing to 10.1kr/kg (86p) by the spring," said Mr Flemin. "But now it is down to 7.6kr/kg (64p), having fallen by 0.4kr/kg (3.4p) last week alone, the biggest drop this year."

With about 40% of Danish pigmeat exported outside the EU, Mr Flemin blames the recent weakening of the US $ and the introduction of Japanese safeguard taxes of up to 653 yen/kg (£3.51) for the downturn. "Most of our third country business is in $ and, to compete with the US, we have to lower our prices. It is becoming increasingly difficult to get into these markets, which means we have to sell more pigmeat into the EU."

Irish values have also been under pressure, having dropped by 10 cents/kg or k7 (£4.40) a pig in the past three weeks. "For 2002, Irish prices are running 6% behind the EU average and almost k18 (£11.30) a pig behind the UK price," said Irish Farmers Association pig chairman, Pat OKeeffe.

"Producers need k1.30/kg (82p) to break even, yet the price following the latest cut is k1.23-1.28/kg (77-80p). This means that every pig sold is losing money."

But in the UK, the signs are more positive. "After almost three months of falling prices, quotes remained largely unchanged last week," said independent consultant, Peter Crichton. "Although the UK AESA weakened further to 92.7p/kg, most of the big contract buyers held their ground at about 85-88p/kg." &#42