Porkers distort prices

By Olivia Cooper

FAT pigs are distorting the UK adjusted Euro-spec average price, the Meat and Livestock Commission has admitted.

Foot-and-mouth movement restrictions have resulted in a higher percentage of overweight porkers, which are now finding their way onto the market, says senior economic analyst Tony Fowler.

In recent weeks, the average p2 probe has been 11.4mm, compared with the more usual 10.9-11mm.

These pigs are fetching lower market prices than normal, which is, in turn, lowering the AESA price.

Although the MLC says the AESA is not produced to put a base in contract prices, it does have a significant impact on the market, says independent analyst, Peter Crichton.

“Most contracts have a strong AESA link – some abattoirs use it as a base price, other will use it to make up 30-50% of the contract price.”

Spot pig prices have improved steeply in the past few weeks, with an industry-wide base close to 103p/kg.

But market movements take two to three weeks to filter through, and the AESA is lagging behind at 97.9p/kg.

However, this time lag is also true when the market weakens, says Mr Crichton.

“It is easy to criticise, but the industry needs a reference price, and in the course of the year it is fairly accurate.”

See more