More pigs pressure prices – FWi PREVIEW OF 1998

FACE=HELVETICA,ARIAL SIZE=”-1″>Tuesday, 6 January, 1998

By FW reporters

CYCLES have an up-side and a
downside. But talk to pig farmers at the moment, and theyll all tell
you the same thing: were definitely on the downside.

Despite the
recent price tumble, previous expansion in the breeding herd is still in
the pipeline. This is expected to take clean pig slaughterings to 15.5
million in 1998, compared with 15m in 1997.

Europe-wide, its a
similar picture, with a 3% rise in production forecast.

Another
0.5kg increase in carcass weights is also expected as farmers, faced
with lower prices and contract changes, push stock to heavier levels.

In a business where the supply and demand so finely balanced, such a
scenario doesnt bode well at all.

According to the Meat and
Livestock Commission, deadweight values will spend much of 1998 below
the 1997 average of 110p/kg.

For some farmers this could be the
final straw, with 100-105p/kg often seen as the minimum break-even
point. The biggest year-on-year differential is likely to be seen in the
summer, with no repeat of the rapidly-rising summer trade expected.


Meanwhile, the prospect of the stall and tether ban will mean extra
costs for some producers. Once again, many will be left hoping for a
bumper grain harvest to push feed costs down.

Pig producers have,
however, not suffered at the hands of the strong Pound as much as other
sectors.

As Continental supplies recover from last years swine
fever outbreak, it will be difficult to maintain 1997s export momentum.
But lower domestic prices will make the UK a less attractive market and
there will be less pressure from imports.

Looking further ahead,
there could be light at the end of the tunnel. The latter part of 1998
could see a slowdown in slaughterings as contraction in the breeding
herd filters through. Perhaps then, pig farmers could be talking about
the up-side of the cycle

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