Mainland Europe dominates UK pig business

By Peter Crichton

THE domestic pig market remains dominated by events over the Channel and by the strength of the Euro in the money markets.

Consumer confidence in the meat trade throughout Europe has been damaged by the BSE crisis and, according to UK pigmeat traders, this will also affect the home market.

Germany has already seen a sharp decline in the demand for manufacturing and sow meat, and this will be reflected in lower cull sow quotes here in the UK.

Although cull sow prices touched 78p/kg deadweight before Christmas, these have slipped by 10% since then with export buyers offering between 70-72p/kg this week.

The demand for bacon-weight pigs in the UK has remained remarkably firm throughout the holiday period, due to good retail demand and a fall in numbers of live pigs in the system.

However, the latest GB AESA showed a slight easing in value to stand at 102.45p/kg compared with 104.5p in mid December.

Live market returns have also been a shade easier to average 81.5p/kg this week.

At the same time, pigmeat imports remain at high levels, with the equivalent of 45,000 Dutch pigs a week hitting the domestic market.

The Malton Bacon factory decision to slash kill levels in half also points to a rising volume of imports to replace the loss of UK pigmeat on the supermarket shelves.

The strength of the Euro will continue to influence the direction of the UK pigmeat market. At the close of the week the Euro was worth 63p compared with 58p last autumn.

A year ago, the Euro was in exactly the same position as it is now, but financial analysts are forecasting a rise in value to average 65p this year.

This will have the effect of adding to the cost of imports and cheapening exports and will help the UK pig industry as a whole.

Meat trade sources are also pointing to the fact that they think some EU pigmeat prices are set to fall following several weeks of rising values.

If they are correct, this will lead to cheaper imports penetrating the UK market and pulling down domestic returns.

However, while UK slaughter numbers continue to slip, home demand should remain relatively firm and it is likely that the industry will see more abattoir closures and short time working in the weeks ahead.

• Peter Crichton is a Suffolk-based pig farmer offering independent valuation and consultancy services to the UK pig industry