Weaner prices heading back to “normal” levels
Like finished pig prices, weaner prices have also been on a declining trend since the latter half of 2017. In fact, by week ended 27 January, the 7kg weaner price was 19% lower than in early August, at £36.65/head. The 30kg weaner price was also a noticeable 13% lower over the same time period.
The pace of decline has outpaced the downturn seen in the finished pig market, with the SPP only losing 11% of its value between the start of August and end of January this year. As average carcase weights have recently picked up, on a price her head basis (based on the APP sample) the decline is smaller again, at 9%.
Weaner prices unsurprisingly tend to follow the same trend as finished pig prices, given that this determines the finisher’s level of income. Since APP/SPP price reporting began in early 2014, the 30kg weaner price has averaged around 41% of the finished pig price on a per head, while 7kg weaners have averaged around 30%. However, by spring 2017, both series were elevated relative to finished pig prices, and remained so up to the end of the year.
As such, the recent more rapid decline in weaner prices means they are now moving closer in line with the “normal” level, given finished pig prices at present.
Finished pig prices are not the only factor known to influence weaner prices. Previous AHDB analysis indicated that in the long term, higher feed costs generally correlate with lower weaner prices, in order to protect finisher margins. With the weaner price being high relative to the finished pig price, we therefore might have expected feed prices to be relatively low. However, looking at feed wheat nearby futures, prices have actually risen strongly since mid-2016, following a similar trend to the weaner price.
Altogether, this suggest finishers have benefitted less from the stronger pig prices over the last year than breeders, purchasing weaners at relatively higher costs compared with finished prices, while simultaneously enduring some increase in feed prices.
So what has been sustaining the higher weaner prices? Tight supplies in early 2017 may have played a role, making it a seller’s market. Equally, in the past producer optimism has also been shown to boost weaner prices. For example, in 2009 and 2010 after period of good profitability, the 30kg weaner price reached as much as 48% of finished pig price, and was as low as 32% in 2012 when the market was less buoyant. Positivity in 2017 may therefore have helped boost weaner prices.
With prices now on a declining trend, this optimism may be running thin. Uncertainty surrounding the future direction of finished pig prices may have helped weaner prices return to more “normal levels” in relation to finished pig prices. Whether this will continue, however, is uncertain. The latest AHDB Outlook review highlighted some reports of difficulties with seasonality last year, which may mean we now see a tightening in weaner supplies. This could potentially offer some support to prices. AHDB will continue to monitor this situation in the coming weeks.
Bethan Wilkins, Analyst
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