Pig prices at a record high

Pig prices are at a record high and are set to continue to rise in the run up to Christmas.

In the week ended 19 October, the average price, at 172.04p/kg was 12p above the same week in 2012. This was a small rise of 0.35p/kg on the previous week, and followed eight weeks’ growth.

It looked as though prices may continue to follow this pattern, said Stephen Howarth, analyst at BPEX.

“Normally, the finished pig market starts to strengthen at around this time of the year as we approach the Christmas season,” he said.

The weaner market also edged up to £54.25 for the week ending 26 October, after a dip in recent weeks, said Mr Howarth.

“An uplift in the weaner market is normally expected during this time of the year,” he added.

Margins

Cost of production eased throughout October, according to BPEX, dropping to the lowest monthly average since December 2011. It was only marginally lower than the previous month at 147.5p/kg, as the rate of fall has slowed. This was due to stability in compound feed prices, said Mr Howarth.

Costs were 16p/kg lower than in October 2012, he estimated. However, pigs being sold during October will have been fed during a life cycle when feed was more expensive.

The finished pig market had strengthened with prices above 171p/kg in recent weeks, he said.

“This means UK farmers received a higher price for their pigs at a time when their cash outflow was reduced, particularly by a lower feed bill,” said Mr Howarth.

“Given that the feed costs currently account for 61% of total costs, the recent easing of prices has significantly improved the situation of producers.”

Despite this improvement, the cumulative losses of producers since the start of 2011 were still estimated at more than £125m, he said.

“Therefore, margins will need to remain favourable for a sustained period before producers feel confident enough to make the investments necessary to improve the efficiency of the industry,” he added.

In addition, the published cost of production did not reflect the cost of producing the pigs which were sold in the month, said BPEX.

Pigs sold would have typically been born around five to six months earlier, with their mother served four months before that, so the cost of producing each pig would depend on feed prices for most of the preceding year, said its Pig Production Costs and Prices report.

Lifecycle cost of production was around 10p/kg higher than published cost of production in September, the most recent data available. However, producers still received a margin of £8.49 a pig.

For this weeks current market prices, visit our farm prices and trends page

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