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Encouraging rebound

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In February, the price should improve, slightly and with difficulty, but it should ameliorate.

When we entered January, there was a lot of 'delayed' livestock due to the Christmas holidays, during which almost a whole week of slaughterings was lost. The high and sustained activity of the abattoirs has reabsorbed an important amount (almost all) of this supply pocket.

Mercolleida, the reference market in Spain, showed an almost imperceptible rise after 26 bear or repetition weeks. 26 weeks without a rise is a lot of time, almost an eternity. Finally, January ended with a rise by €0.01/kg LW in the last market session.

Mercolleida  showed an almost imperceptible rise after 26 bear weeks

The euro has sunk with respect to the dollar (since Christmas it accumulates a devaluation in excess of 10%). The weakness of the euro is good for the European exports: we are more competitive, and without doing anything important, European meat has a higher demand at the expense of American meat.

Having a price under production costs creates doubts, stress and losses in the trading accounts. The whole of Europe that produces pork works with negative margins, and the great question is: until when?

The situation is worrying:

  • The domestic market consumption still does not take off. It is said that in 2014 there was a decrease by almost 2% in pork consumption in the EU.
  • Russia still does not open its market to European meat. The last attempts of some member states to negotiate with Russia as equals have been quickly discredited by Brussels. The EU authorities seem to say “all or no one”, as France has been able to verify.
  • The EU's exporting balance sheet in 2014 shows a result of 140,000 tons less exported with respect to 2013. The absence of Russia has not been totally compensated.
  • The EU's production tends towards a slight increase (mainly due to a greater efficiency of the sows).

In February, the price should improve, slightly and with difficulty, but it should ameliorate. Spring is still far away, and the road may be a terrible ordeal. The situation does not seem good in comparison to the last two years.

The great statesman Winston Churchill said (when England suffered the falling of the German bombs): "In this world a man must either be anvil or hammer."

Guillem Burset

Guillem Burset

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08-Feb-2015 lylavilleGood news
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