Articles - Economy

The harsh reality is that the outlook is bleak in all Europe.

COOL story can be summarized as “Be careful what you wish for, you might actually get it”.

Although the European exports have behaved well so far this year (the Russian embargo has been compensated), this is not enough: the weather has not favoured the BBQs in Germany and it is still too early for the summer pork consumption in the south European coasts.

Big news in US as Seaboard and Triumph Foods announce plans to build and operate a large-scale packing plant in Sioux City. One of the things which this move signals is the further coordination of the production sector with consumer demand.

April has gone by with a surprising change in the trend of several European markets.

Everyone in the United States is waiting for the return of the seasonal pattern and the prospect of prices breaking out of this extended period of flat-lining which has gone on for almost two months now.

Guillem Burset comments on various current affairs of the European pig market: stocks and private storage, merger of Tican and Danish Crown, prospects on the price recovery…

Unfortunately, it looks like the ground hog of pork price forecasts saw a long shadow when it emerged in late February and the tiny bubble of hope that the already late-to-end seasonal lows of winter were over was put on hold.

The prices recover both in northern and southern Europe.

Export markets may not be as robust as forecast by USDA due to very slow economic growth and actual recession in many countries. Add to that the massive value increase of the dollar versus its chief competitive currencies as the cost of oil plummeted…

In February, the price should improve, slightly and with difficulty, but it should ameliorate.

We think that administrations must take urgent actions regarding the crisis in the pig sector.

USA breeding herd expansion seems inevitable.

In our sector we know well that if Germany sneezes the whole of Europe catches a cold. Last Wednesday the prices dropped by €0.04 in Germany…

Just like the emergent molten lava from Mount Kilauea, so an historical metric of the US hog industry, having lay dormant for many years, is creeping ever so slowly over its profit destroying "trigger" level. That metric is the hog corn ratio.

Europe as a whole has a flat depressive profile with the prices in the minimum levels of the last three years.

All the ingredients required for a pig industry expansion: Oxygen (PEDv becoming manageable) + fuel (high profits and lower feed ingredient prices ahead) + a spark (intentions to farrow 3-4 % more sows).

All the European markets lower the prices very quickly to position their meat as best as possible with respect to its rivals. The search for alternative markets is essential…

September will be a bear market month. We still have to see the pace of the drops.

It' is not as simple as the larger pigs have better survivability...

During July Germany has made a strong challenge that is difficult to process for the whole of Europe.

We hear a lot of talk about optimizing profitability in grow-finish through reducing standard deviation of marketed weights and aiming that tighter weight group at the profit optimal average weight at the time of marketing. It’s a bit like playing darts, you want the darts to be in tight group but it is also necessary to be near the bull’s eye on the target.

The low supply sets the pace of the price of pigs, but there are many more factors at stake: multiproduct commercial flow from Denmark to US; Russia has just presented a proposal for the opening of exports from some countries of the EU, etc.

Current pig market weights are through the roof and at all-time highs for the modern period of meat pig production. We should be noticing a big decline shortly but…