DCA Stock Price 2.0 benefits from multiple factors

The pig supply is tight and the meat market is picking up. Slaughterhouses want the pigs, but do not go to extremes. That is the gist of the commentary about how different parties interpret the pig market. In the Netherlands, there has been some noise in the market, because the quotations have deviated slightly from each other in the past week. Where Compaxo and Vion implemented an increase of 2 cents per kilo, Van Rooi added 3 cents.

In Germany, the internet stock exchange provided another positive stimulus on Friday. While the indicator of the German market (the internet exchange) has taken a standstill in recent weeks, the price suddenly rose by 4 cents again on Friday to 1,64, with all pairs being taken. However, the movement of the internet stock exchange does not guarantee that the German pig price will increase at the same pace on Wednesday. The fact that Tönnies still does not have the green light from China makes the German pork market feel cautious.

In week 11, Tönnies closed the 3 cent gap with the 'Vereinigungspreis', but the market leader remains an unpredictable factor and is not motivated to blindly follow the market. It is estimated that Tönnies is currently losing out on around 8 euros per slaughtered pig due to the lack of the China license. Perhaps next Tuesday the internet fair can again provide a positive stimulus that can convince the German market.

The meat market shows a significant improvement in week 11, with various parts of the pig increasing. The backs and shoulders recorded a plus of 4 cents, the hams and bellies even increased by 5 cents. Given the improvement in the European meat market, slaughterhouses with an export license are in the profitable margins anyway. Slaughterhouses can also do good business on the spot market, it is heard. These weeks are also used to supply the cold stores with stock, which means that not all pigs are eligible for a plus on the meat market.  

This means that slaughterhouses are happy to gobble up the available supply. However, finding supply is not always easy in practice. This is because several fattening pig farmers are holding on to the pigs due to the improving piglet market. The risk of weight discount is therefore increased. There is probably speculation that waiting may be rewarded, because the pig market is preparing for further increases.  

Given the tight supply and the improving meat market, an increase is appropriate. That is why the DCA Exchange Price 2.0 increases by 3 cents to 1,55 euros. Live pigs increase by 1 cent to 1,22 euros. Given the uncertainty in Germany, larger pluses are too risky.