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Unbeatable expectations

The Spanish market has taken a rest for Easter, but the rises will go on.

Thursday 4 May 2017 (2 months 16 days ago)
dean.dekmcrisol

We end April with pig prices higher than in March, and we will end May with prices higher than in April. And it goes on and on, as we said in our last comment.

In these first four months of 2017, Spain has slaughtered 1% less than in the first four months of 2016. This is a fact, and it justifies (only partially) the consistent upward trend seen: 11 consecutive weeks of rises, from January 26th to April 6th: €0.223/kg in 11 weeks. Surprising! I take my hat off!

The price repetitions in the last three market sessions must be attributed to the Easter holidays, which have been useful for reducing the drop in the weight of pigs, but not much more. In week 17, that we are now ending, the average carcass weight is 800 g below that of last year. The market has taken a breath, but the rises will go on.

Germany has a structural livestock deficit: it is having a bad time buying live pigs from its bordering countries (Denmark, The Netherlands, Belgium), and even doing that does not get to equal the slaughtering figures of past years, although Germany still is the European leader in terms of slaughters and its market has shown the way to the rest of the countries in the EU.

The EU market has behaved wonderfully, and pork and the prime cuts have risen in accordance with the increase in the price of pigs. The other side of the coin are the difficulties that this quick rise (greatly unexpected, we must say) has caused and will cause to the great pork processors. The great supply chains love to buy in the long term and at predetermined prices… and it is evident that this philosophy does not match with important and sharp increases. These are bad times for the processors.

The European prices for hams, shoulders, necks and loins are the highest now. As a logical result, the export of these cuts to third countries has stopped abruptly. It is only a question of time that the EU markets become saturated, although all is in the air because there are not significant frozen product stocks.

The price of piglets still is at levels never seen before, and this is an obvious evidence of the lack of livestock. The scarcity in the supply and the unfavourable weather of every summer can justify rises in the price of pigs that will be difficult to pass on to pork. Probably, the abattoirs will have a bad time for keeping their margin in the next months.

We cannot walk on water, although sometimes it seems so.

The American entrepreneur Jean Nidecht said: "It is your decisions, and not fate, what decides your destiny.”

 

Guillem Burset

<p>Guillem Burset</p>

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