Gap widens between contract and spot pig prices

Although pig producers have been hoping prices might soon start recovering, unfortunately due to reports of pressure from large retailers all four main contract buyers held their shout prices last week.

Prices for the week ended 14 October were as follows:
• Woodheads: 145p/kg
• Cranswick: 142p/kg
• Tulip: 142p/kg
• Vion: 141p/kg
• GB Euro Deadweight Adjusted Pig Price: 144.52p/kg (-0.40p)

Because of the gap now opening up between contract and spot prices some producers elected to sell on the spot market rather than take a lower contract price. But this soon put a damper on any further rises in spot quotes, which earlier in the week looked as though they might be going up by 2-4p/kg.

Spot bacon was generally traded in the 145-147p/kg range, with small premiums for lighter pigs available. But with indifferent high street demand and something of a supermarket price war opening up, prospects of any significant further improvements in prices between now and the end of the year may prove slightly over optimistic.

With lower feed costs weaner prices are tending to stabilise. The latest Agricultural and Horticulture Development Board 30kg ex-farm weaner average is up from £39.98/head to £40.04/head, but prices need to go up by a further £4-6/head before many producers are back in the black.

The relative strength of the euro, which closed on Friday (14 October) worth 87.63p, has helped keep up the cost of imported pigmeat and for cull sow export quotes to remain firm with bids in the 108-111p/kg region according to specification.

After several months of falling values, cereal prices now seem to have bottomed out with ex-farm feed wheat up by £4/t over the week to £145.30/t.

LIFFE futures quotes for November wheat closed on Friday at £147.50/t (+ £1.30/t) with January 2012 at £150.85/t (+ £2.10/t).