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Thursday made seven market sessions that ended with the same result. The Spanish price is firmly anchored at 1.30 € / kg live weight and it doesn't seem like it will budge any time soon.
We have to recognize (and tip our hats) that Spanish slaughterhouses show extraordinary resilience; the differences in the pig price between us and our neighbors and competitors remain the same as they were a month ago; our price in Spain is grossly higher than that of any of our European competitors. As we said, in Spain it seems that rather than a pig price, we have a "monument to pig prices", at the top of a pedestal.
Evolution of pig prices in several European countries from January to August 2020.
We have to admit that our prediction turned out to be wrong when we said a month ago that the price would go down. The drop has not happened nor is it expected. The Spanish slaughterhouses aren't working miracles, but almost. Someone should, one day, write about the history and the ins and outs of pig slaughterhouses in Spain.
Germany and its satellite markets (neighboring countries: Belgium, the Netherlands, Denmark) have gone weeks without changes in price (Belgium climbed a little from the bottom of the pack) tangibly demonstrating that their market is balanced.
We know that this has been an atypical year if there ever was one; the pandemic has completely disrupted consumer habits and tourist flows (to the misfortune of the countries on the Mediterranean shore). Summer consumption in southern European countries is much lower than normal; tourist-sending countries have seen many people prefer to vacation locally and their consumption has not been affected by the usual summer vacancy.
China continues its trade activity by buying enough quantities in the European Union so that excessive stocks are not being built up; the constant flow to China is the factor that most influences and determines the European markets.
Antagonistic forces coexist in our market, all being very powerful:
- In favor of the price going down is the enormous difference between us and our neighbors; all of Europe has pork prices in line with the purchase level of Germany or the Netherlands, not so much in line with the Spanish pork price.
- Against the price going down is the limited live supply, the weather, and increased demand.
Whether we like it or not, the market is in balance; all the operators we have spoken with believe that the movement that will tip the balance will be upwards. Traditionally, pigs go down in September in Spain because they recover from the summer slow-down and the supply grows considerably. It does not seem that this increased supply (compared to August) will be able to cover the perpetual (for now) lack of animals for slaughter.
This is shaping up to be another historic year for pig farmers.
We will end today with two very appropriate famous phrases to reflect on:
Health is the unit that gives value to all zeros in life (Bernard le Bouvier de Fonterelle).
Anyone whose goal is 'something higher' must expect someday to suffer vertigo (Milan Kundera).
Guillem Burset
