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Could there be hope on the horizon for pig prices?

AHDB computer modelling has shown there could be an upturn in prices.
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Computer modelling by an AHDB market intelligence specialist has pointed to some recovery in the pig price in the months ahead.

 

Tracking the relationship between pig prices and various other factors from 1995 to present, Stephen Howarth’s exercise was aimed at establishing if the market could expect another decade-long period of low prices, or a recovery as quickly as they fell.

 

The factors modelled include:

  • Exchange rates of the pound against the euro and dollar
  • Consumer Price Index
  • UK and EU pig meat production and change on year
  • UK imports and exports of pigmeat
  • Crude oil price
  • Global food and cereals prices
  • Seasonality factor
  • EU pig prices
  • Unit price for imported pork

Mr Howarth said: “Modelling prices based on these factors allows us to explain well over 90 per cent of the historic variation in GB pig prices.”

 

However, the model’s results show the price should have increased in January and risen again in February, but in reality they did not.

 

Mr Howarth added: “History suggests short-term deviations from the model do happen, but they typically correct themselves fairly quickly. If this is the case again, we might see some price recovery in the months ahead. However, this relies on there being no factors missing from the model which might impact on prices.”

 

He acknowledged while the factors included were thought to cover most of the main influences on the UK pig market, there was no consumer demand indicator because of a lack of consistent long-term monthly data.

 

He also acknowledged using historical data of this kind to predict future prices relied on the assumption historic relationships between factors would continue to hold true.

 

The main reasons why the model should have shown an increase, he said, were the weaker pound and the firmer EU price in sterling terms.

 

“There are instances in the past, for example during the 2001 foot-and-mouth outbreak and around the 1996 BSE scare, when the model has temporarily broken down,” he added.

 

“While there are clearly no disease issues of this kind at the moment, things such as the apparent reduction in consumer demand for fresh pork, the Russian import ban and the WHO/IARC report, could be contributing to the current lower than expected prices. Therefore, there remains some uncertainty about the future level of pig prices.”

 

NFU Scotland’s pigs committee chairman Kevin Gilbert said he would be delighted if the prediction came to be.

 

But in reality he said he would be ‘staggered’ if it happened and was concerned it did not take into account some factors, including the Russian import ban and consumer demand.

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