It ain't easy
15th Sep 2018 / By Peter Crichton
Another tough trading week ahead with the SPP continuing on its downward track losing 0.23p to stand at 148.05p/kg and a further reduction in four euro cents in the influential German producer price, following on from last week’s seven cent slump, will keep UK pig meat prices 'under pressure'.
Very few spot transactions are taking place with most pigs being sold on contract but where there were any deals one off loads of spot pigs were unlikely to be worth more than between 142-144p in the main.
Further reports however of sharp reductions in fertility levels especially with outdoor herds during the heatwave last summer are flagging up an “ongoing black hole” in pig numbers in the months ahead which may help to prop up prices. Just a pity that UK producers cannot benefit from good values and numbers to match!
Following on from the German price fall cull sow bids eased to the tune of 4p/kg and it is a pity that the early September cull values of close to 80p/kg have soon evaporated.
A rise in the value of the pound has also done us no favours on the pig meat import/export trading front where a week ago the Euro was worth 90p compared with 89.16p today. 30kg weaner averages are also drifting south with the latest AHDB 30kg average losing £1.80 in value to £53.74 although the 7kg average was marginally firmer at £37.24.
However, the gap between Red Tractor and Freedom Food weaners gets ever wider with very few takers for Red Tractor weaners either in the 7kg or 30kg category and it is difficult to know where homes will be found for some of the latter on the spot market for those producers unlucky enough not to have a contract locked away in a safe place.
Grain futures prices are a shade easier over the past week with November feed wheat trading in London at £173.10/t, March 2019 at £178.05/t and July 2019 at £178.70/t. Spot ex farm UK feed wheat values have remained at similar levels to average £170/t and although some shrewd producers made a number of forward feed buying decisions several months ago, some of these will be running out towards the end of the year, adding significantly to COP levels.
UK protein prices have however staged something of a recovery with 48% Brazilian soya meal rising from £315/t to £329/t although 34% rape meal has remained at similar levels around £230/t mark.
And finally, shortly after this commentary was prepared, the threat of African swine fever has moved much closer to these shores with the shattering news that ASF has leapt into Western Europe with reports of an outbreak in Belgium. Reports are indicating that this was identified in two wild boars rather than on commercial pig farms and measures are already in place to prevent the possible spread of the disease in non-wild boar which could then be transmitted to pig farms.
It is hoped that these latest outbreaks will not jeopardise the ability of the EU to continue to export pig meat to China. readers of this commentary are reminded to look at the warnings sounded on this front just a week ago and now must be the time for the risk level to be assessed as “high” rather than “medium” in terms of biosecurity and prevention levels.