January 6, 2004
Subdued Start To UK Pig Trade
Pig trading in Britain for the first week in the New Year got off to a subdued start, reflecting the downward trend of the UK Adjusted Euro-Spec Average (AESA) over the past three months.
The AESA closed last year at 101.12p/kg, compared with 107.68p/kg in mid-November - a drop equivalent to almost £5 a pig.
As a result most spot bacon buyers were paying 98-102p/kg last week (w/e 3 January), with contract base prices between 98p and 100p/kg.
Lighter pigs were worth 6-10p/kg more than this, although retail demand for pigmeat was reported to be sluggish.
One of the main factors influencing domestic prices continues to be the much cheaper pigmeat in many EU countries.
Producers in Denmark, Holland, Germany, France and Spain are receiving 70-80p/kg, giving importers as much as a 20% price advantage after allowing for processing and transport costs.
GB meat traders are reporting large quantities of foreign legs trading at about 45p/lb, undercutting the home market and leading to sharp drops in the value of GB legs, to about 53-58p/kg.
As the leg represents a large proportion of the carcase domestic abattoirs have found it difficult to maintain their prices in the face of such cheap imports.
The relative strength of the Euro, which closed at 70.5p on Friday (3 January), has helped to put some stability in to the market.
The implementation of the latest EU Private Storage Aid measures may also help to put a base into prices.
But pig producers' main concern remains feed costs, which have almost doubled over the past 12 months due to the drought in 2003.
The recent BSE outbreak in the US may also lead to greater use of soy in animal feed rations and put more upward pressure on the price of straights.