Pigs bottom out at 70p/kg
PIG prices seem to have stabilised at just over 70p/kg liveweight.
Peter Crichton, Bury St Edmunds-based consultant, says at this level exporters can do business with Europe. "If it goes much above this, it becomes difficult."
Trade has a firmer feel, says Mr Crichton, after Mondays average auction value in England and Wales rose 2p to 72.5p/kg. "But theres certainly no cause for rejoicing. Prices are still below the cost of production for most farmers."
With deadweight quotes only varying by about 4p/kg at the end of last week, it makes more sense to take stock to heavier weights – especially in view of the cheaper feed, says Mr Crichton. "It costs about 30p/kg to put 1kg on a pig."
It only pays to sell them as porkers if there is a 10p/kg-plus premium doing so, he says. "Now, theres almost a one-price pig."
But auctioneer Chris Clubley at Selby cautions producers against making a sudden shift in fattening policy. "In markets, we need to continue supplying the varied demand that we have. We dont want a sudden swing."
He, too, reckons prices have found a level. If they dip below 70p/kg, people hold back from selling stock, so supplies tighten and prices nudge back up again.
Tony Fowler, economist with the Meat and Livestock Commission, reckons supplies will continue to be the dominant factor – and there is no sign of any downturn until 1999.
The stall and tether will have less impact this year than originally thought, because some farmers have already quit and those that do cease production in the coming months will be the smaller ones, says Mr Fowler.
"If sterling was to weaken in the second half of this year, as some economists are predicting, that would help. But the jury is still out on this one."
The break-even price is about 100p/kg dw (75p/kg lw). And with little prospect of any improvement, many farmers will continue to operate below break-even, says Mr Fowler.
At Hull, auctioneer Mark Caley says cheap sheepmeat and beef have also been a factor pushing pigmeat values down. "Twelve months ago, you could predict trends – but you cant do that now," says Mr Caley. *
Market prices could now have hit the bottom of the trough.