December 31, 2009
UK's finished pig margins under pressure in 2010
UK's finished pig prices are under pressure as processors seek to reduce the gap between the premium prices for higher-welfare, heavily regulated British product and imported cheap pig meat.
The sector's prospects for 2010 will depend significantly on currency exchange rates and the first real upturn in the size of the UK breeding pig herd for more than a decade.
DEFRA's June census indicated a 4.6% rise in sow numbers to 440,000, compared to 421,000 in 2008.
Slaughterings have increased in the second half of the year, mainly due to better sow productivity and lower disease incidence. "Sow productivity has been increasing for much of this year, and is estimated to be 7% higher than a year ago," said Lewis Butlin from Andersons.
While returns from finished pigs fell back in the second half of 2009, they remain almost 10p/kg higher than last year. The Deadweight Average Pig Price rose steadily to peak at over 150p/kg in April, but then fell away to just under 140p/kg in December. Sow prices at around 112p/kg are more sustainable than the higher values seen in 2008.
Butlin added that risk management strategies make sense for pig producers, although some are finding processors have been moving away from contracts to spot prices and away from DAPP-plus premiums previously paid.
