Although UK producers probably need another 15-20p/kg to break even European pigmeat prices are starting to rally with sharp rises in Spain and Germany and quotations in all other EU member countries improving.
Reduced slaughter pig availability is changing the dynamics of the market from bearish to bullish.
UK contract sellers have also been helped by a further improvement in the value of the DAPP which closed worth 111.8p.
As a result spot pigs were in short supply which meant that abattoirs looking for extra numbers had to lift their bids by 4-6p to be in the running.
Opening spot bacon quotes for supplies week commencing 25th February opened in the 104-106p on Friday, but due to a shortage of supplies by the close of trading bids in the 108-110p range were available.
Lighter pigs are also starting to earn a premium and cutters were quoted at 4-6p above bacon.
Cull sow market
The cull sow market often provides an early warning indicator of pigmeat price trends in Europe and quotes have been rising relentlessly from 64p/kg in late December to over 80p for next week.
This represents an increase which traded on Monday 25th February worth 75.4p compared with 67p in February 2007 when cull sows were trading at 72p/kg
The weaner market has yet to react to a better outlook for finished pig prices with the MLC 30kg ex farm quote still £5 – £7/head below cost of production at £29.86.
High feed prices
Forward costs of high feed prices for the remainder of the year will continue to affect all sectors of the pigmeat production supply chain.
Current delivered prices for feed wheat are nudging above £180/t with soya at £263/t and forward wheat quotes for harvest look unlikely to drop much below £150/t.
Although there have been reports of better harvests in South America, Australia and other southern hemisphere countries world demand continues to rise. The extra tonnages grown are unlikely to have much of a negative pull on the market.