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Better than expected

Evolution of prices in Spain, Germany, The Netherlands and Belgium in 2018.

Evolution of prices in Spain, Germany, The Netherlands and Belgium in 2018.

Ending the year with a price similar to that of the cost price and with a more than significant growth in production can only be considered as excellent.

Tuesday 4 December 2018 (13 days ago)
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In Mercolleida's market session of November 29th, the price has not changed (€1.038/kg LW). After 12 consecutive drops in price, there has been a repetition of the price (also with a repetition agreement for two more weeks). This only reflects the balance reached in the Spanish market.

We undoubtedly have the price for the whole month. Only after Christmas we'll have to see if the delays amassed due to the holidays justify a new drop in price or if the price can resist. Come what may, a price of almost €1.04 right now was unimaginable a couple of months ago. All seemed to tell that the price could drop below €1.00/kg, but the quick response of the abattoirs, increasing slaughterings abruptly as soon as they ended losing money has limited the extent of the drop in price. The supply is greater than ever, but in turn, slaughterings are also greater than ever. In November there have been record slaughtering figures almost every week.

The truth is that the Spanish price is very near the German price (only a mere €0.012 cheaper), when the norm would be having an even lower price. All the European prices are very similar, except the Belgian price, due to its situation regarding pig health.

We are reaching the end of the year, and we can guess that the slaughterings will be 6% (maybe 8%) higher than in 2017. Year after year the slaughterings grow, and we cannot guess the top limit to this progression. The truth is that ending the year with a price similar to that of the cost price and with a more than significant growth in production can only be considered as excellent: better or even much better than expected.

The international situation does not show significant changes: ASF in Belgium seems limited to its initial area (an it has only affected wild boars so far), and in the case of ASF in China there's still a trickle of new cases in areas that were free of the disease up to now. The truth is that lately, China is buying more than ever, although at rock bottom prices.

In Europe there are few stocks of frozen pork. The instability of the market (with an undeniable health risk) stimulates the abattoirs to sell here and now just in case. This is, in itself, an element for optimism: we are slaughtering to the fullest, and if the stocks are below minimum this means that there's still room available.

The USA show record slaughtering figures, although their prices don't seem affected, moving between the usual parameters there. Canada, as always, follows what happens in the USA.

We are in December, and in a very comfortable situation: much more than what was expectable. Let's wait and see how things go on during the Christmas holidays and let's get ready to start the new year from a very good starting point.

We shall end with a great sentence by the great Magnus Carlsen (Norwegian, 28 years old), that has recently defended his World Chess Champion title: “It's better to trust your instincts and fail sometimes than to question yourself constantly.”

Guillem Burset

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