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Spring Is In The Air

2nd Feb 2018 / By Peter Crichton

The news that the influential German pig producer price had risen by 3 cents helped to put a spring into the step of UK pig producers.

Having watched this key price decline almost continuously since last June, it was good to see it heading north rather than south, and hopefully this is more of a trend than a one off price correction… we shall see. 

Unfortunately the SPP took a fairly major downward step this week however, dropping by 1.42p to 146.83p. It is worth remembering, however, that EU mainland pig meat prices are way below this level with the European average of little more than 111p/kg which is still letting in large volumes of much cheaper imported pig meat to undercut our market. 

'Stand on' seemed to be the main trading pattern today with most factory contribution prices staying at similar levels (apart for one dropping, tut tut). The same applies to a scattering of spot pigs and spot bacon prices were reported to be in the 132-136p range with demand still fragile. 

A slightly weaker pound helped put up the value of the Euro a shade over the past 7 days, trading on Friday worth 87.8p compared with 87.32p a week ago. A combination of the currency movement as well as an improvement in German pig prices encouraged UK cull sow export abattoirs to put up their prices in the region of 2p/kg, with most now trading in the 62-64p bracket which is still way below their value of 94p/kg 12 months ago. 

Weaner prices have continued their recent roller coaster ride, with the 30kg ex farm average dropping by £1.39/head to £51.70 and 7kg piglets also slipped by £1.23 to £36.65. 

One feature of the weaner market has been the significant premium being paid for Freedom Food standard weaners compared with Red Tractor. The differential seems to be getting wider and wider with one off spot loads of Red Tractor pigs hard to place but plenty of potential customers for Freedom Foods, and in some cases gaps of more than £5/head have opened up between these two categories. 

The grain market ended another quiet and uneventful week with little variation in UK cereal values where the latest average ex farm spot wheat price is quoted at £136/t. 

Looking further afield, grain analysts are pointing to another year of an increasing surplus in global wheat stocks and availability, although reports of the onset of dry weather in the US could soon put a bull into this particular china shop. 

UK protein prices have remained at generally similar levels with 48% soya meal traded ex-Liverpool at £312/t and 34% rape meal ex-Erith at £171/t. 

And finally, the Brexit timetable draws nearer by the day. Good to know that the NPA have been busy setting out their Brexit proposals and priorities in meetings with DEFRA. 

Trade remains a key priority and the ongoing need for our industry to have free access throughout the EU for cull sows as well as critical export markets. There is also a strong case for ensuring that imported pig meat from within and beyond the EU matches the same welfare standards as our domestic product and no doubt this is something that the NPA will be emphasising in their discussions with government bodies. 

Ever since stalls and tethers were outlawed in the UK, we have been at a financial disadvantage and we must try and learn from this to ensure that we come out of these Brexit negotiations without being too battered and bruised – or it will be another case of short term gain being replaced by long term pain.