An expected strong price can prove self cancelling
No doubt merely an unfortunate coincidence, auction prices of live pigs weakened by a couple of pence on Friday May 12, the day after the MLC launched its controversial advertising campaign, and were still softening on Monday and Tuesday though showing signs of regaining stability.
These saleyard prices are always easy to dismiss as irrelevant to the mainstream trade, as the numbers are tiny. On the other hand, value erosion anywhere in the market looks rather odd when supply tightness is supposed to be unprecedented.
MLC's economists, writing in their weekly market survey published on the day the liveweight price skidded, noted that the benchmark contract quotations had hardly changed since mid April and there had been little movement in spot deadweight prices. The pattern was the same in the main markets on the continent.
Easter was the explanation offered. Despite pig availability being limited by breeding herd contraction, it was enough to meet abattoir requirements in the short killing weeks.
Logically, the return to full-time slaughter should quickly clear any stock backlog on the farms and stoke up prices again. Yet as last year's market demonstrated, an expected strong price can prove self-cancelling by stimulating an unexpectedly strong supply flow from an industry in which official census statistics are not entirely reliable.
Optimists among buyers will have been encouraged by the surprising number of clean pigs now thought to be still in Danish production units (The Grocer, May 13, p25).
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