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The culmination of a great year. Future doubts.

As of today, with 2017 almost ended, the annual Spanish pig price (arithmetic, not weighted) mean is €1.26/kg LW.

Wednesday 27 December 2017 (1 years 22 days ago)

On June 19th, we predicted, in this section, that the arithmetic mean of the prices this year would be €1.24-1.26/kg LW. Right… as of today, with 2017 almost ended, the annual (arithmetic, not weighted) mean is €1.26/kg LW. Any way you look at it, it is an extraordinary result.

On the other hand, on September 29th, we predicted that the price by the end of the year would be €1.04-1.10/kg LW. The last Spanish reference market session (Mercolleida) showed a price of €1.015/kg LW. We slipped, or we were too optimistic.

Once the Christmas holidays end, there is a drop in the demand for meat (as happens every year), and this makes the price of pork fall. Europe’s prices have a downward trend. The German price has dropped by €0.08 in two weeks. The prices in The Netherlands follow suit, and fall also. It seems that all Europe changes its prices seeking desperately for a final bottom price.

The total number of pigs slaughtered in Spain will be 0.5% higher than in 2016. This figure is very significant if we compare it with that of other EU countries, and even more if we see the series in the last three years: 2017 vs 2016 = 0.50%; 2016 vs 2015 = 8%; 2015 vs 2014 = 8%. In the first half of 2017, the slaughterings were less than in 2016, but as of September, they increased, reaching, by the end of this year, the modest increase by 0.5%.

We will end the Christmas holidays with delayed livestock. The abattoirs have shown in these last weeks that they can reach all-time records. In January it will be essential to slaughter at full speed to absorb the delayed animals. The average carcass weights this week are 2% higher than in the same dates in 2016. In essence, this datum shows that pigs are already piling up before the Christmas holidays.

We think that in January the pig prices will decrease enough to stimulate abattoirs to slaughter as ever. In the international markets we will have to face the strong American competition, benefited by a 14% more expensive euro than a year ago (or a cheaper dollar).

Resist, resist and resist. That is the motto. Let’s wait so the decrease in the number of pigs in northern Europe allow us to find new and not much explored destinations for our pork. Freezing to store or speculate don’t seem an option yet, but we’ll have to freeze necessarily due to “the absence of the clients in Christmas”.

We are in Christmas, and this is a time of peace, harmony and love. Let’s enjoy this truce with our families, let’s put aside our worries and doubts until January. Let’s relax our spirit and let’s try to soak ourselves in the Christmas essence.

Merry Christmas and a Happy New Year to you all.

Guillem Burset

<p>Guillem Burset</p>

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