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Typical scenario: the impossible does not happen

In Spain, August 15th will mark a turning point. The supply is recovering and the price will drop. In Europe there is an oversupply. The dollar is falling and the prices of American meat are more attractive.

Tuesday 25 July 2017 (2 years 27 days ago)
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In the three market sessions in July the Spanish price has repeated. Germany fell by €0.05 and €0.06 the two first weeks (remember here the previous article). In July, the holidays start in Germany, and consumption drops markedly. This radical fall in Germany prevented any rise in Spain.

The average carcass weights in Spain are the minimum acceptable (they are lighter, week by week, than in the three previous years), and the supply has dropped for weeks due to the heat. The environment would be a rising one if Europe helped. For now, the repetition of prices is the norm.

Europe as a whole is slaughtering way less than last year. Accumulated values in 2017: EU -3%, Germany -3%, France -4%, Belgium -7%, Spain -1%. This lower availability of meat does not cause any strain on the market, because China is still hardly buying European pork. In Europe, there is an oversupply of meat. The dollar is falling and the prices of American meat are more attractive.

In Spain, the celebration in August 15th will, no doubt, mark an important turning point. The supply is recovering (the pigs are small, but they must be sent to the abattoir to leave place for the ones behind), and the price will drop. The current price does not have any upward trend left.

2017 will be the second tax year in which Spain will export more than 50% of the meat that it produces. Tourism, and its associated demand, is a factor of soundness, but it has a lower value year after year, and all suggests that its importance will be lower with time.

Globalisation is an unstoppable phenomenon (concentration also follows a parallel path), and currently we must watch things from the prospective of the Global Market. Spain competes against the rest of the EU countries, and the EU competes against Canada, Brazil, the USA, etc. The value of the dollar is a parameter that is becoming increasingly important and that shapes and affects the pace of sales. Right now, the USA and Canada are more competitive than Europe, and when autumn, and its high supply, comes, much lower prices than now will have to be accepted. We must sell outside of the EU, and to do it we must have attractive prices in the world market.

An anonymous thinker wrote: “Don’t brood on the past, because you can’t change it. Don’t allow the future to overwhelm you: you don’t know if it will come. Enjoy yourself and live in the present, don’t allow it to go away, because once it has gone it will not come back.”

Guillem Burset

<p>Guillem Burset</p>


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