Meat market limiting factor for DCA Stock price

In terms of pig supply, the story of slaughterhouses is similar weekly slaughter figures. Various parties in the Netherlands and Germany communicate that the supply is barely sufficient compared to the slaughter plans. Given the fact that the slaughter figures are behind 2016 and the five-year average, this statement is confirmed in black and white. However, supply does not dominate price formation in mid-February and only forms resistance. The meat market is still too weak to motivate slaughterhouses to fill the last brackets through increases. 

When the German slaughterhouses blocked a 4 cent increase in week 5, it was a signal that the meat market has difficulty absorbing such increases during the winter months. Two setbacks that the meat market has suffered these weeks are the weak pound and Tönnies's withdrawn export license. British buyers have been less active in the bacon market for a long time, which has traditionally been a reliable trade flow.

The troubles at Tönnies also have an influence on the market, even though the largest slaughterhouse is ultimately only one player. Coincidentally, Tönnies is exactly the party that is ideally placed to impose its will on the market. The signals that the internet stock exchange sends out - with stable movements - are typical of the market situation in Northwest Europe these weeks. Higher pig prices with sales exclusively in Europe are actually not acceptable. Something that slaughterhouses without an export license probably know all about.

The more southern countries such as France and Spain, which showed a more even picture in 2017, managed to find room to make a few extra cents in recent weeks. This mainly has to do with the pig supply and not so much with an improvement on the meat market. French slaughterhouses still complain about marginal margins.

The pig market is waiting for an impulse to increase. This must come from the meat market and it is still too early for that in mid-February. The movements that the components make every week are not yet enough for an increase. In week 7, the backs, hams, shoulders, bellies and fats all remain unchanged. In recent weeks, the shoulders have made up for the loss of 16 cents, which was recorded over weeks 51 and 52. This means that the extreme price pressure that this component temporarily caused has ceased. Parts that go to China recorded a minimal plus last week, but not enough to get things moving. 

The celebration of Carnival, which starts next Friday, also affects the pig market. This means there is some shifting around of pigs, which temporarily makes the supply feel a bit wider. 

Somewhere in the corridors there is a sense that the market is pushing for an increase. We have to wait for the moment when slaughterhouses actually have more delivery obligations and the urgency becomes greater to get those last pigs on the hooks. This is not yet the case for next week and that is why the DCA Exchange Price 2.0 for slaughtered pigs remains at 1,48 euros. The live pigs are also trading unchanged at 1,17 euros.