November 14, 2011

 

UK's pig prices forecast to remain steady
 

 

Pig prices in the UK are forecast to stay at similar levels until the end of 2011 as long as the euro does not fall further.

 

An overall on-year comparison paints a better picture for the industry as a whole. The early January 2011 DAPP was as low as GBP1.3767 (US$2.21) per kilogramme and feed wheat was quoted in the region of GBP190 (US$305) per tonne.

 

However, with rising labour, fuel and straw costs, retailers and processors need to be reminded that for the UK pig industry to remain on a sustainable track, pig meat prices still need to improve.

 

BPEX and the NPA are concerned about how other EU countries will interpret the January 1, 2013 partial stalls ban.

 

Even after January 2013, their use will be allowed for a period of four weeks, equivalent to 25% of the gestation period.

 

As a result BPEX and the NPA are urging the major retailers and food service providers to make a public commitment to sell only UK welfare standard or UK compliant product to avoid a two-tier market opening up continuing to undercut UK pig meat produced to higher welfare standards.

 

Stability returned to the UK pig market during October. The Deadweight Adjusted Pig Price (DAPP) opened at GBP1.4480 (US$2.33) per kilogramme and ended on a slightly firmer note at the end of the month worth GBP1.4507 (US$2.33).

 

Spot prices also tended to harden during the month despite the euro coming under pressure from turmoil in the financial markets and the Euro zone crisis.

 

Cull sow prices have always provided a ready barometer of pig meat values in Europe and these opened in early October in the region at GBP1.08-1.12 (US$1.73-1.80) per kilogramme and by the end of the month cull sow quotes were between GBP1.12 (US$1.80) and GBP1.16 (US$1.86) per kilogramme.

 

With cull sows now averaging more than GBP170 (US$273.05) a head, producers have the opportunity to replace worn out breeding herds with young gilts and in some cases a cull sow will now pay for 1.5 replacement gilts.

 

Stability is also returning to the feed market with early November ex-farm feed wheat deals in the GBP143-146 (US$230-234) per tonne range and LIFFE futures prices for January to May between GBP151-155 (US$243-249) per tonne.

 

Weaner prices are also starting to stage a modest recovery, especially for those being produced to Freedom Food standards where premiums of GBP2-4 (US$3.21-6.42) a head are available.

 

The 30 kilogramme ex-farm average weaner price at the start of November was GBP41.28 (US$66.29) a head compared with GBP39.98 (US$64.2) a head in early October, according to AHDB. Despite the improvement this is still lower than cost of production breakeven levels for some producers.

 

This market remains affected by a general shortage of weaner accommodation due to ageing finishing units and alternative diversification projects such as barn conversions and light industrial use providing attractive alternative uses.

 

Some weaner producers on light land are also considering switching to outdoor rearing and finishing and although this will carry higher feed costs, it can in some cases still be a cheaper alternative than paying a third party contract finisher to rear pigs indoors, especially if as a result the stock qualify for outdoor finished Freedom Food premiums.