We have witnessed 11 consecutive weeks in which the Spanish reference price has dropped by 25%. We have gone from €1.435 to €1.075/kg LW. This is a very hard and drastic correction. In the last session at Mercolleida, the price ‘only’ dropped by €0.03/kg LW, setting a certain moderation in the range of the price falls.
We are dangerously near the production costs, and nevertheless the doubts regarding the limit of the drop are still present. There is a very plentiful supply, pigs weight 3 kg more (carcass weight) than last year by this time of year (this means almost a week of slaughterings, or at least more than half week), and in the global market, China almost remains the same. The holiday on November 1st will not help.
According to the situation, we are in a bad moment. With the current price, the abattoir does not dare ‘slaughtering blindly’ (this is, slaughtering for freezing later) yet, and it would be necessary that the slaughtering capacity was used at its full potential to control the very plentiful supply.
Exporting carcasses is not a commercial option (none of the European markets, neither the more distant available markets, have prices that are sufficiently more expensive than ours), and this path for relieving the pressure (quite used in autumn in past years) is closed for the moment.
By late 2015 and early 2016, we lived a seemingly collapse situation. We came out well, and this time should not be different. We are at the beginning of these difficult times, and our prices were very high, so the contrast is spectacular.
Our price will still fall (reluctantly, with slight drops, but it will fall) until reaching a point in which all the pigs that can be slaughtered will be slaughtered. Nobody can anticipate where the bottom price is, but cannot be very far away.
It is obvious that the markets are interconnected and that the European countries’ prices do not differ much from ours. Our problem is Europe’s problem.
Let us hope that we can export massively to the Far East countries (especially China). There lies the key of the European pig production profitability. This is the case today.
Let us end with a quote by Thomas A. Edison (the lamp bulb inventor): “Many of the failures in life happen because people do not realise how close they are to success when they surrended.”