Poor start to year for pig industry

Pig trading on the spot and contract markets has opened the year on a downbeat note.

Falling EU mainland pigmeat prices are undercutting the UK market.  The latest EU mainland average producer price of 82p/kg has dropped by 17% over the past three months.

Although the Deadweight Adjusted Pig Price on which many contract prices are based remains firm at its latest quote of 107.83p, spot prices have fallen.

Spot bacon is now being quoted in the 106 – 108p range according to specification, but even at this lower level remains vulnerable to imports.

Cull sow prices are also reflecting much lower EU pigmeat values.

Export abattoir bids have fallen to circa 70p/kg with few signs of any improvement until the EU pigmeat market picks up.

The relatively low value of the € which opened on Monday 8th January worth 67.3p is doing little to help the pigmeat import/export balance.

The rising cost of feed is also hitting margins throughout the industry.

Delivered prices for feed wheat are now being quoted in the £96 – £98/t which represents a rise of up by almost 50% on this time a year ago.

Analysts are concerned that unless prices remain profitable during 2007, additional pig units, many of which require major reinvestment, will go out of business opening the door to yet more cheaper imports.