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Too many pigs

Spanish abattoirs are slaughtering at their maximum capacity, but nevertheless, several weeks will be needed (probably until late February) to reabsorb the accumulation of delayed pigs.

Monday 1 February 2016 (3 years 8 months 21 days ago)
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Predictably, after the Christmas holidays it has been confirmed that there were (and still are) lots of delayed pigs. The mild winter weather does not hinder their growth, and the average carcass weights have beaten all the records and are still very high.

There are many, too many pigs.

We are facing a structural imbalance: in the last three or four five-year periods, the Spanish slaughtering capacity and the pig herd have grown more or less at the same level (with periods with a clearly higher demand than supply), but the last biennium, with good margins for the professional pig production, has entailed a growth in supply of live pigs (higher prolificacy; more efficient facilities, whether renewed or new) that exceeds the slaughtering capacity. This is what is causing the current chaos.

The supply is very plentiful, and the abattoirs are slaughtering at their maximum capacity, but nevertheless, several weeks will be needed (probably until late February) to reabsorb the accumulation of delayed pigs.

The private storage operation has ended. It has lasted two and a half weeks. 90,000 tones have taken advantage of this option (80% between Germany, Spain, Denmark and The Netherlands). The unusual speed at which these 90,000 tonnes have been reached already shows in itself that there has not been a lack of supply. In Spain, 19,000 tonnes have been stored: this equals 24,000 pigs, or 25% of the weekly production or a bit more than the production of one day.

These 90,000 tonnes represent less than the slaughterings during TWO WORK DAYS in the whole of the EU. It is better than nothing, but it is clear that the current market would need other stimuli. We think that this has only helped to support the prices, and that it has not been, by any means, the solution.

In Germany, the price rose by €0.03/kg carcass in each of the two first weeks of January, dragging Belgium and The Netherlands (real satellites of their leader neighbour). This has not happened in Spain, and the few positive thousands of euro gained must be assigned to the arbitration mechanism at Mercolleida rather than to the market.

Spring is still far away, and it will be very difficult to improve the prices. If the winter cold weather came, the pigs would grow more slowly, and the consumption of fats would reactivate. Let us hope that Mother Nature will not let us down.

Sadly, we do not expect significant changes in the Spanish prices in February.

From the Spanish collection of proverbs: “Every flat path has some cliffs.”

Guillem Burset

Guillem Burset

29 January 2016

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