By FW commentator Peter Crichton
The GB Deadweight Average Pig Price (EU) has risen by over 3% since the start of the year and now stands at 141.62p, but feed prices have been rising at a faster rate over the same period.
The recent spell of dry weather across much of Europe has hit cereal yield forecasts and as a result the latest UK futures prices (as at 28 April) were quoted at £206/t for July delivery and £173/t for November.
A year-on-year comparison has seen the UK ex-farm average price of feed wheat more than double from £98/t in 2010 to £202/t for the week ending 29 April 2011.
Reports of higher than average UK sow slaughtering throughputs for the first four months of the year are also providing ready evidence of the effects that much higher production costs are having on producers’ margins at a time when pig prices have only increased by a marginal amount.
Positive market pointers are however emerging in Europe where the average big six European mainland producer pig price has jumped by 23% since the start of the year and is now quoted at 136p/kg deadweight.
This is due to better European demand and slightly lower slaughtering levels, despite the euro gaining in value from 83.6p at the start of the year to 88p towards the end of April.
UK clean pig slaughterings for the first two months of the year were running at an average of 186,000 head per week, but lower weaning levels caused by higher mortality during the cold weather over the Christmas period may reduce slaughter pig availability during the May/July period.
Pigmeat also looks extremely competitive when compared with lamb, where over the last 12 months producer returns have risen by 19%. Beef has also shown a 10% price improvement over the same period, compared with slaughter pig prices which have actually fallen by 2%.
The proposed EU-wide stall ban due to be effective from the end of 2012 is also expected to further limit European pig production levels due to the very high associated costs involved in converting intensive indoor breeding units to free access stalls at a time when the whole industry is also having to cope with much higher feed prices.
The National Pig Association (NPA) is campaigning for major retailers to pay a higher price for UK welfare-friendly pigmeat products and to support fairer and more transparent pricing systems, which the NPA claims is the key to the survival of the UK pig industry as a whole.
Further interesting evidence of the overall size and financial health of the UK pig herd will be provided when the June 2011 Census is announced later on this summer.
The upcoming 2012 London Olympics should also lead to a rise in pigmeat consumption levels and prices. But unless we see a significant improvement in producers’ margins before then, more UK herds may well have ceased to trade and will miss out on the “Olympics effect”.
Peter Crichton will provide weekly and monthly pig market reports for Farmers Weekly. Read the latest at www.fwi.co.uk/business