Prices continue to rise but margins hit by soaring costs

Pig prices continue to rise but crippling costs of production continue to hit profitbality across the pig sector. 

The EU-spec SPP rose by another 1.23p to 151.74p/kg in the week ended May 22, the 10th consecutive weekly increase, during which the measure has risen by 12p. It is at its highest level since late November and, while nearly 13p down on last year's levels, is now close to 5p above the five-year average. 

Market reports continue to describe supplies as tight, which will be influenced by falling carcase weights, AHDB said. The average weight in the SPP sample for the week was 86.55kg, 210g lower than the week before and the lowest level since last September.

Domestic demand also remains robust and reports indicate demand in Europe has started to pick up recently too.

The EU-spec APP also continued to increase in the week ended May 15, rising by 1.69p to 153.89p/kg. 

But the current price is still well below the estimated pig production cost, with wheat prices still at around the £190/200 mark and soya and straw costs also soaring. 

The scale of the financial problems facing producers this year is highlighted by AHDB figures showing producers lost, on average, £26/head in the first quarter of 2021, with costs estimated at a massive 174/kg, while the APP averaged just 145p/kg. 

While the recent prices have brought some relief, there is unlikely to have been a lot of change on the cost front, meaning negative will be continuing into this quarter. 

To see Pig World's weekly price graphs, click here.