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Following the steps of 2015 or how to get ready for the worst

Evolution of the price in the Mercolleida market in the last years.

Evolution of the price in the Mercolleida market in the last years.

Europe has a surplus and needs to export. The USA has increased its production and needs to export. The Russian market is closed for Brazil, and Brazil needs to export…

Monday 30 April 2018 (3 months 16 days ago)
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April ends with four consecutive repetitions in the Spanish price, and seven weeks have gone by without changes. The price curve moves almost mirroring that of 2015, only three years ago. Back then, our price did not exceed €1.26/kg LW in the best moments of the year, and 2015 closed with an average price of €1.13/kg LW, just enough to save face.

We started 2016 below €1.00/kg LW, and it wasn’t until May that the price exceeded this figure. The enormous Chinese demand emptied the stocks. We were very lucky.

In the first four months of 2018, in Spain we have slaughtered 5% more than in 2017, and if we compare it with 2015, the slaughterings have grown by some 15% (+8% in 2016, +2% in 2017 and +5% in 2018). We know that we export more than 50% of our production, and we also know that in the Global Market, everybody competes against everybody, and right now we don’t have the best playing cards.

China’s pork price is the lowest in the last 10 years due to a great production. This has made its imports drop to a bare minimum. We don’t expect the situation to change in the short term, this meaning that, this time, China will not come to rescue us.

Europe has a surplus and needs to export. The USA has increased its production and needs to export. The Russian market is closed for Brazil, and Brazil needs to export… The competition is fierce, and it is urgent to sell the surpluses.

The good weather is coming, and it will probably cause the demand to increase. We’ll see how far our price can evolve (let’s not forget that it is the highest price in Europe right now).

The Spanish abattoirs are walking the razor’s edge: their margin is almost non-existent (in April, pigs have repeated their price, but the price of pork has dropped), and any rise in the price of pigs will be very hard (and very controversial) if the price of pork doesn’t follow suit. Our great dependence on exports does not allow rises in the price of live pigs. We are in the 21st century, and not in the 1970s (when we didn’t export and in summer the prices went up and up).

The rule would be to wait and see while we prepare ourselves for tough times.

A Spanish saying goes: “There is no better inheritance than work and diligence.”

Guillem Burset

<p>Guillem Burset</p>

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