By Peter Crichton
2nd February 2018
“Spring Is In The Air”? (Frank Sinatra and friends)
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) and 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, and 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, where 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.
9th February 2018
“Always Look on the Bright Side” (Monty Python)
Although the SPP edged down by a gnat’s crochet, losing 0.03p to stand at 146.8p. European mainland prices are painting a somewhat brighter picture with the influential German producer price following on from last week’s 3 Cent rise having a further 7 Cent increase, meaning that this index price has risen by 10 Cents over 2 weeks, but a word of caution as it still only stands at 1.4 EUR, which in Sterling terms is circa 124p/kg and well below UK levels.
Hopefully UK weekly contribution prices should be pulling out of their recent downward slide with some of the big players standing on, but two disappointingly still shedding a penny (you know who you are), which hopefully will be repaid with more to spare next week?
Demand for spot bacon remains quiet but will have lifted to some extent following the better news from Europe with spot buyers still cautious, but at least most bids have been on the topside of 130p/kg.
Cull sow prices have also improved reflecting better European demand for pigmeat and a firmer Euro, which traded on Friday up 1% at 88.72p.
As a result, UK sow values rose by an average of 4p/kg with most now quoted in the 64p – 67p/kg bracket.
Weaner values also rose with the latest AHDB 30kg ex farm average improving to the tune of £1.52/head to £53.22/head and 7kg pigs also up by £0.67/head to £37.32/head.
However, reports of significant increases in UK piglet mortality coupled with poor conception rates may fuel something of a shortage in the months ahead, as well as knocking a hole in producers’ bank balances and it is worth remembering that 4 week weaning during the cold winter months is a particulary hard system and higher levels of TLC may need to apply.
This situation has not been helped by the much higher rainfall levels seen during the December / January period, which has provided outdoor producers with yet another challenge.
Global wheat prices have been under pressure reflecting bearish trends with London feed wheat quotes for March easing to £135.50/t and July to £139.90/t. UK spot wheat has ended the week little changed at an average of £135.50/t.
And finally, a spotlight continues to remain on the threat to our industry posed by African Swine Fever and the current outbreak has already caused the deaths of more than one million pigs globally.
Until an effective vaccine has been developed it will be very difficult to limit the spread of the disease, often linked to wild boar movements across wooded areas of Eastern Europe with reports of an increase in the number of cases in Poland.
As this is one catastrophe we could certainly do without, biosecurity remains a top priority across the whole of the country to help minimise the spread of the disease if it crosses the Channel as well as more point of entry warning posters and the like to remind everyone of the scourge of ASF.
16th February 2018
“It’s Getting Better” (Mamma Cass)
Signs of better pig prices are finally emerging with the influential German producer price up by another 6 cents to stand at 1.46 EUR which is equivalent to 130p /kg in our money and for the record this price has now improved by a total of 16 cents over the last 3 weeks.
Other European prices are all heading north but this is yet to filter through to the UK market.
Most weekly contribution prices are expected to hold at stand on levels but should rise in the weeks ahead although fresh meat wholesalers are still reporting indifferent demand with competition from imported cuts and joints across the board.
Spot bacon prices for regular sellers are generally between 130p-135p region.
Cull sow prices also continue to improve reflecting better EU wide demand for pig meat with most export buyers lifting their bids by around 3p and 70p/kg is now achievable.
The value of the Euro has also remained firm with trading on Friday worth 88.9p.
With the hopes of better finishing prices in the spring/summer some weaner buyers are showing more interest and coupled with high mortality and low conception rates in some herds, the signs are that weaner numbers could tighten in the weeks ahead.
The latest 30kg ex farm AHDB average is £52.96 down by 0.26p and the 7kg average is £38.13up by 0.81p.
23rd February 2018
“Little by Little” (Oasis)
As the song title suggests, prices are starting to show slightly firmer price trends with the SPP actually going up for once by a modest 0.15p to stand at 146.07p, although most weekly contribution prices stood on in the 137p/kg region.
Fresh meat wholesalers are still reporting demand as “patchy” and UK pigmeat supplies are still being undercut by foreign imports of cuts and joints, which remain competitive despite the influential German producer price going up a further 4 Cents, which represents a 20 Cent increase over the past 4 weeks and currently stands at 1.500 EUR, which is equivalent to 132p/kg in our money.
UK spot bacon prices have remained at generally positive stand on levels with the chance of an extra copper or two in places, but perhaps with spring around the corner we will see some further upward movement in the weeks ahead and in the run up to Easter?
Cull sow prices are also continuing to head north, albeit by a fairly modest 2p/kg, with quotes mainly between 70p – 75p/kg according to load size and spec.
However, a stronger Pound saw the Euro traded worth 88p this week compared with 88.8p seven days ago, which unfortunately does no favours as far as cull sow prices are concerned.
Weaner values are holding at generally similar levels, although the latest AHDB 7kg ex farm average dropped by £1.68/head to £36.45/head, however no quotation is currently available for 30kg weaners.
The grain market has ended a relatively quiet week, although there is some concern over the very low temperatures in western and southern Europe which could cause frost damage to wheat crops and a cold snap is expected to cross much of the UK and Europe in the coming days and there have also rain deficits in Portugal and eastern Spain, which has certainly not been the case in the UK!
On the domestic market, UK feed wheat has been traded on an ex farm spot basis at around £136/t, which is almost identical to the March futures (delivered) price of £135.40/t, with July trading at £141.15/t and longer months are generally more money.
And finally, for those of you young enough to look ahead to the post Brexit era, it was good to hear Michael Gove announce a review of bureaucracy burdens placed on farmers and a commitment that environmental or animal standards would not be lowered as part of any new trade deals….we shall see!