Farmgate pig prices have strengthened following a period of downwards seasonal pressure in the early weeks of 2017, according to analysis by Quality Meat Scotland’s (QMS) economics services team.
The GB Standard Pig Price (SPP) began the year by sliding slightly in seven out of the first eight weeks and, as a result, prices slipped from 151.9p/kg dwt at the end of 2016 to 159.6p/kg in the week ending 25th February.
However, three consecutive weekly gains raised prices to a nine-week high of 151p/kg in the third week of March. Compared to a year earlier, this represented an increase of 35%.
“While this impressive year-on-year increase will be of comfort to producers, it should be noted that the market remains below the levels of March 2014, while feed prices have also risen sharply over the past year,” said Iain Macdonald, QMS senior economics analyst.
“The combination of firm home and global demand for wheat, lower EU production in 2016 and currency movements have seen feed wheat trading 40-50% more expensive than last spring,” explained Macdonald. “Soyameal is also up, by more than a fifth, mainly down to a weaker sterling against the US dollar.
“A key barometer of the prevailing market conditions is the spot price available to producers for pigs out with regular contractual deliveries,” he continued.
“Whenever spot prices fall below contract levels it points to a well-supplied market. However, at times when processors are having to seek supplies from outside their regular scheduled deliveries, the spot market will firm.”
According to QMS, industry sources suggest that spot prices were falling until early February, but by the beginning of March had risen above contract levels, indicating tight supply relative to demand. Therefore, Macdonald observed, the recent lift in the SPP has come of little surprise.
This story was originally published on a previous version of the Meat Management website and so there may be some missing images and formatting issues.
