Butcher carrying porkRex/Shutterstock

Pig prices could be close to their peak after hitting a three-year high.

The EU-spec standard pig price rose for the 19th time running in the week ending 8 July.

At 163.86p/kg, the price stood more than 37p/kg higher year-on-year and was the best since summer 2014.

A mix of a weaker pound and fewer slaughterings at home and abroad have been behind a steady recovery, after the market hit the bottom last March.

There also signs of growing export demand, with AHDB reporting that British pigmeat shipments leapt 15% year-on-year to 19,100t in May – the first increase in 2017.

“The main driver will be that supplies have just been tighter,” said AHDB analyst Bethan Wilkins. “Nearly every week this year has seen throughputs lower than they were last year.

“A lot of people cut back on their breeding herd and now there are fewer pigs available.”

 

Supplies are expected to pick up in the second half of the year, which could restrain the market.

Last week, as prices picked up again, slaughterings fell 3% on the week and 9% on the year to 161,000 head.

AHDB’s latest production forecast, published in April, expected UK output to decline in the first six months of 2017.

Pigmeat production was predicted to pick up in the second half, which would leave the whole-year figure down less than 1% at 898,000t.

With the market more balanced, farmers may now be in a better financial position.

The average net margin per head, estimated by AHDB, just turned positive in the third quarter of 2016. In the first three months of this year, the figure had grown to £12/head.  

Independent consultant Peter Crichton said the market may be “on the cusp of the turn”, with German prices stuttering in the past couple of weeks.

The broader prospects were still good, Mr Crichton said, which may nudge producers to consider investing.

“Some have been rebuilding and some have been restocking their herds and some are going to have a big tax bill to pay,” he said. “It is a great opportunity to rebuild now because there is a good margin there and if you do not spend it, it will go in tax.

“Looking ahead, as long as the Chinese market remains there and the European demand is not switched off, we are looking at a firm outlook.”