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The (transatlantic) danger does not cease

Both USA and Canada still have an abundance of pigs and very low prices. This great amount of pork must be taken care of, and it will no doubt be at the expense of the European pork.

The USA and Canadian pork must find its place, and it will do it, no doubt, at the expense of the European pork.
The USA and Canadian pork must find its place, and it will do it, no doubt, at the expense of the European pork.

We are reaching the end of the year with a balance that is more positive than what we could have thought of twelve months ago. By the end of November 2015 the Spanish price was below €1.00/kg LW and it seemed that it would not change. Not even the more optimistic would have imagined that a year later an average price of more than €1.12/kg (higher that the cost price) would become established.

The truth is that, globally, the Spanish pig sector (farmers, abattoirs, butchering rooms and processing industry) is quiet. All the activities show benefits now (modest benefits in all the cases, of course, but benefits for all, whatsoever), and it may be a good idea to "freeze prices and markets” until after the Christmas holidays. The fact that it is unrealistic does not make it less seductive.

The truth is that Europe follows Germany. There are no surplus pigs in Germany (previous comments have dealed on the reduction of its pig population), and the slaughterings are completed importing pigs from its neighbouring countries. The tensions that this causes have been solved with three consecutive rises in price (+ €0.02, + €0.02 and + €0.03/kg carcass), and Spain has turned its back on this. The situation south of the Pyrenees is very different to that in Germany. There is a structural scarcity of pigs there, and here the pig population grows non-stop. It is true that our price is lower than that in Germany because the situations are different. Our price is way below the German price for the first time in years.

The "danger that does not cease" in the heading refers to the situation in North America, that is not expected to improve. Both USA and Canada still have an abundance of pigs and very low prices. There are reals problems there to slaughter the offered pigs: the same scenario week after week.

Our price is about €1.12/kg LW, and the German price about €1.20/kg LW. In USA and Canada it is about €0.73 and €0.63/kg LW, respectively (the USA has reacted with a slight upward trend in the second half of November). It is been more than two months with these huge differences and with maximum slaughterings. This great amount of pork must be taken care of, and it will no doubt be at the expense of the European pork. We fear that with the new year the European pork will find it difficult to find acceptable destinations.

January will be the moment of truth. Up to now, the year has gone well, and this is irreversible. The recipe seems to be to keep calm until January.

We will end with a saying by the great Seneca: "That who expects to get to a certain place should take only one way and not test many at the same time, because the latter means not walking, but wandering."

Guillem Burset

Guillem Burset

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