By Peter Crichton
THE recent modest price rally in the UK seems to be running out of steam with mid-week auction prices failing to maintain the significant gains of the previous week.
The Malton decision to ditch its 70p “fixed” price and go on to a weekly spot price only partly linked to the AESA means that they will now be able to undersell some of their competitors.
According to meat trade sources this could also help to wipe out recent spot price gains. Although this will help Maltons profits many of their hard pressed suppliers will be driven further into the red.
The latest UK AESA reflects slightly better demand and has risen by 1.6p to stand at 63.12p for the week ending 17 October.
With the Pound recovering some of its earlier strength against the DM and UK slaughterings still running at very high levels, some of the more bullish industry predictions of 80p/kg at the end of the year are now being looked at more cautiously.
Although all the statistics point to lower UK numbers and better demand this has yet to be translated into a sustained price rally. Unless this materialises soon many more UK pig producers will be forced out of business.
According to Signet, who still quote a base cost of production for efficient breeder/finishers of 92p/kg. Most producers are still selling at losses up to £21/pig.
Coupled with this are fears that extra pigs will come on to the spot market in early December when several Malton supply contracts expire and at the same time contract pigs will be pulled forwards for Christmas, which is now only eight weeks away.
The picture throughout much of the EU is still one of high numbers and low prices. The recently published April 1998 census figures show herd increases in all the big six producer countries apart from the UK where producer prices are the lowest except for Holland.
However, the Dutch average carcass weight is 87.5kg, some 15.5kg above the UK and producer deductions are lower resulting in a proportionally higher banked figure for their pig farmers.
- Malton U-turns to slash pig prices, FWi Markets, today (23 October, 1998)
- Peter Crichton is a Suffolk-based pig farmer offering independent valuation and consultancy services to the UK pig industry