Strong demand keeps finished pig price keen
By Tim Relf
FINISHED pig prices continue to be buoyant as lower supplies and a brisk export movement shore up values.
Strong demand from Japan as buyers seek to source supplies before the imposition of an import tariff – expected to apply from Oct 1 – has supported the market.
"Danish producers are exporting much of their product to Japan and this has meant there is more demand for UK product in the rest of Europe," says Duncan Sinclair of the MLC.
Were it not for the Japanese the AAPP would be running at about 110p/kg, he suggests. As it is it rose to 118.17p/kg in the week ending Aug 26. (A year earlier the figure had been under 100p/kg.)
Prices look set to fall when the Japanese demand shrinks. But, says Mr Sinclair, the rise in Japans "gate-price" will come when supplies are relatively tight and the demand is rising seasonally.
Supplies so far this year have been tight. During July, for example, slaughterings were 4.5% down on 1994 and the pattern during August is thought to be similar.
The limited number of slaughterings is partly due to the hot weather, says Simon Draper, who sells pigs at Rugby. By worsening feed conversion rates it has led to fewer pigs being marketed, he says.
"With the weather as it has been I thought prices would have dropped further than they did," he remarks. "Now the hot weather appears to have eased off this will help prices." Mr Draper also doubts if any large increase in the breeding herd is imminent. "With high grain prices producers may choose to sell cereals rather than using them as feed," he says.
Rising feed costs are also seen by auctioneer Mark Caley at Hull as an important factor in limiting profitability.
"Margins will be eroded away as the price of feed increases without a corresponding rise in the price of finished pigs." And this, he says, will lead to a continuation of the trend of average unit size increasing.
Mr Caley saw cutters sell to 106p/kg lw to average 98p/kg on Monday. Baconers, meanwhile, reached 102p/kg to level at 94.6p/kg. Like many auctioneers, he says most pigs marketed are of cutter or bacon weight. "There are not that many pork pigs anywhere," he concludes. *