The pig market in Europe is recording excellent levels. This makes 2017 an above-average year for Dutch pig farmers so far. The expectations for the second and third quarters are also positive. This is what Rabobank states in its first quarterly report of 2017.
In the first quarter of this year, pig prices had a wait-and-see attitude at an acceptable level. The piglet market was a bit more attractive in the first months and even passed the 60 euro limit per piglet in mid-April. The increase in piglet and pig prices is mainly caused by a tight supply. During the December count, the sow herd in the Netherlands recorded a contraction of 1,7 percent. Within Europe, the contraction was even 2,9 percent.
This contraction is also visible in the number of slaughters. In the first quarter, the slaughter figure in the Netherlands was 12.000 fewer pigs than in 2016. The export of finishing pigs showed a greater contraction. In the first 10 weeks of this year, 82.000 fewer pigs crossed the border. That is a minus of 12,4 percent.
Substantial feed gains
In the first quarter, feed profits in the sow farming sector rose by approximately EUR 575, compared to 2016. In the fattening pig farming sector, the profit was more moderate. This is because the feed profit was EUR 10 higher here. Rabobank expects the feed profit in 2017 to be approximately 45 to 50 percent above the long-term average. In the fattening pig farming sector this is 20 percent higher.
Expectations
The expectations for the coming months are nothing short of positive. The piglet shortage for months means that the supply of finishing pigs will probably be tight. This works price-supporting. Outside Europe, export volumes are doing well. Demand from Japan and South Korea is picking up cautiously, while sales to China are stabilizing. However, the market outside Europe is sensitive to price pressure from the US.
Battle of the arm
Despite the positive prospects, Rabobank is still on the fence. If a price dip occurs in Europe, the Dutch pig farming sector will be the most vulnerable. The average cost price rose in 2015 to 1,60 euros per kilogram of slaughtered weight. This is about 5 to 10 percent above the cost price of other EU countries. According to Rabobank, the current market conditions are no guarantee and account must be taken of a subsequent price drop in the future.
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