Hot weather lightens up EU pig demand

Although European mainland pigmeat prices have traded at low levels since the start of the year, signs are emerging of higher returns as summer approaches.

The recent spell of hot weather has helped to stimulate barbeque demand throughout much of mainland Europe.

As a result key EU market prices have moved ahead by up to 5% and Dutch, German, French and Danish pig producers also reaping the benefit.

According to EU meat traders, strong barbeque demand for loins, ribs and neck joints has lifted an otherwise stagnant market at a time when supplies are starting to dwindle.

A similar pattern was seen 12 months earlier in the run up to the World Cup when rising EU values helped UK spot prices to hit the 114p level by mid June.

The latest Deadweight Adjusted Pig Price of 106.14p compares with 100.45p a year ago.

With most contracts paying 3 – 4p premiums above the DAPP, spot and contract prices are level pegging in the 108 – 111p range.

But UK pigmeat values will continue to be dominated by the EU mainland market as a whole and the strength of the €.

The Euro opened on Monday worth 67.8p which is still below its 69.4p level at the end of April 2006.

Newspaper speculation of rises in UK Base Rates may however lead to a stronger Pound, allowing cheaper imports to penetrate the home market.

Rising feed prices are also putting pressure on producers’ margins throughout the EU with ex farm feed wheat now trading at over £95/t in the UK compared with £69/t a year ago.

Further rises in EU pigmeat values will therefore be welcomed by the industry as a whole to meet the challenge of higher feed costs which may rise further until the recent dry spell comes to an end.