Abattoir cuts on the cards?

By Peter Crichton

THE slaughtering sector is starting to feel the effects of the worst pig price slump since the 1920s as numbers start to dry up.

High sow culling throughout the autumn is now starting to show in the store and finished pig sectors.

Although January slaughter numbers remained high at 311,000/week, reports from abattoir buyers and marketing groups indicate much tighter supply now.

Last week, the Malton Bacon factory was said to be 14,000 pigs down on the numbers normally handled, and short-time working was on the cards for a number of plants.

The recently set-up Avonmore “big four” group buying operation resulted in some farmers being paid more than the official four-week price of 76.50/kg as the groups committed to finding the contracted numbers subsidised the producer price to fill their contracts.

90p/kg spot quotes

With end-of-week spot quotes predicted at up to 90p/kg, trade sources believe that contract buyers will find it hard to source the numbers needed in the weeks ahead.

This is because a gap of 8-15p/kg has opened up between spot and contract buyers, and many producers who are borrowed up to the hilt have no choice but to take the highest prices on offer.

Although the UK AESA has moved up 3p/kg to stand at 71.35p/kg – and hit the highest level since the 15 August 1998 – it is still 21p/kg behind production costs quoted by Signet.

After many months of at the producers expense abattoirs are now finding that the tables have turned, with volumes down and prices up.

Coupled with this is the discounted price of imported supplies and most of the “big six” EU pig production countries are trading at much lower levels.

  • Latest EU reference prices show Dutch producers receiving 52p/kg and the Danes 61p.
  • EU markets are recording price rises across the board but, with better demand for UK pork on the internal market, the outlook is brighter for most domestic producers.
  • UK slaughterings are predicted to fall by at least 10% but, with the domestic market 75% sufficient, the UK market should remain ahead of most of the main EU centres.
  • Weaner prices have surged with the majority of 30kg pigs now trading above £30/head. Ex-farm prices are as high as £35 in the north where herd culling has been at higher levels.

  • See more