Prospects of pig price rises appear bleak

By Simon Wragg

RELAXATION of pig prices is likely to continue into the autumn as retailers report a flat demand for product and a firm Pound encourages the use of imported supplies.

In the week after major processors announced a cut in contract prices of up to 3.5p/kg to an average of 83p/kg deadweight, market prices have been swift to follow suit.

Despite an up-beat message from its Tuesday market last week, Northampton auctioneers saw trade ease back 3-4p with porkers at 65p/kg, cutters and baconers 3p/kg and 5p/kg less, respectively.

Trade at Selby market, which pulls clean pigs from the West Yorks area, has fallen back by about 11p/kg in the fortnight. “Thats across the board,” says auctioneer Chris Clubley.

“We seem to be plodding along at about 60p/kg, but as soon as it creeps up to 70p/kg it all slips back again.”

The recent spate of hot weather hasnt helped consumption, says MLC economist Jane Connor, but that is just one factor suppressing the market.

Sterling, declining beef and lamb prices and an over-supply of some pig joints – particularly imported legs – have also compounded pressure on prices.

Retailers report a flat demand for product at the moment and that may not pick up until after the summer.

That could see some producers plunged into a loss-making situation for another prolonged period. Mr Clubley fears the industry is “right on a knife edge” and some may be forced out of production.

Although banks have appeared to stand by many producers, officials suggest the level of credit run up by some has become a major concern. Valuations are also likely to be unpalatable with the relaxation in cull prices expected to continue for some weeks to come.

Hull-based auctioneer Ralph Ward has seen 10p/kg wiped off cull values for the weekly entry of 185 sows and boars to average 36.9p/kg.

“Theres been a two-fold influence. Early on more buyers helped competition and numbers forwarded rose. Now there are fewer buyers left and a similar number of culls.”

Overall, national cull figures have eased by about 30% over six months to 6500 a week, according to MLC figures.

At the same time, processing countries such as Germany have seen demand ease as consumption follows a similar pattern to the UK market. “It could be September before things pick up again,” warns Mr Ward.

The malaise in the pig sector following these price falls has been swift to hit the store pig sales.

Mondays trade at Exeter, which saw 200 store pigs entered, was a steady affair with contract cuts “failing to excite buyers into paying more for pigs on offer”, report auctioneers.

Two-month-old stores sold to £11.50 a pig, up to three-month-old to £15 a head and advanced stores to £25 each.

Although the current market reports make for poor prospects, MLC predicts that prices will perk up later in the year as supplies tighten and demand increases.