A higher pig price is still a long way off

The weeks near Christmas and New Year's Eve are usually exciting. Stability is usually hard to find. Based on the 5-year average, the price rally has already started from mid-November; 2016 was a textbook example of a traditional Christmas revival. Then, between mid-November and mid-December, the German pig price rose by €0,10 to €1,62 per kilo. This is due to a tight supply.

However, in the last 2 weeks of the year, the pig price fell and the quotation fell to €1,48 per kilo. If the end-of-year rally does bring profits, it is usually temporary. The correction that follows is often greater.

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The German pig price is likely to break the 2017-year average in 5.Many pigs in the Netherlands
December 2016 is still fresh in the minds of some. That is why there is hope for a price revival again this year. Whether that will happen remains to be seen. There can hardly be a shortage of pigs in the remainder of 2017. Until the end of October there was an oversupply of piglets, which means that there are still many fattening pigs in the pipeline for the time being. The declining piglet market continued until mid-November. Various parties confirm that the stables are quite full here and there.

Moreover, this year there will be structural fewer live fattening pigs to Germany, about 10% from week to week. Since the summer, slaughterhouses have had too many rather than too few pigs. The last increase dates back to the beginning of June. It is unlikely that slaughter figures will decline in the last weeks of 2017. It is much more likely that the slaughter record from 2015 (week 51: 341.000) will be surpassed. Dutch slaughterhouses confirm that they will also slaughter on Saturdays in December. Once Christmas has passed, the slaughter pace is significantly reduced.

Christmas falls unfavorably
It is likely that pigs will be brought forward this year. Christmas is not a good time this year, in terms of the number of slaughter days. Christmas falls on Monday and Tuesday, which means that 2 slaughter days are lost. New Year's Day also falls outside the weekend. In 2016, both Christmas Day and New Year's Day fell on a Sunday, so the impact was less significant. In addition, the meat trade comes to an almost complete standstill between Christmas and New Year, only to get off to a lukewarm start in the first weeks of the new year. 

Traders report that pig farmers are already anticipating the calendar. This is done by bringing pigs forward. After all, the chance of a pig's clot between Christmas and New Year is realistic. There is nothing in the market to indicate that there will be a tight supply of pigs before Christmas. Danish Crown, for example, aims to reduce slaughter weight until Christmas. In this way, the slaughterhouse tries to manage the meat supply. Many Dutch traders opt to keep the pig price stable for as long as possible. Forcing a plus will probably produce a 'boomerang effect'. 

January and February challenging
At the current price levels, slaughterhouses can write returns, several parties confirm. There is therefore no need to reduce at this time. This may change with the start of the new year. The first quarter is usually a lackluster period in terms of meat sales. This almost always results in falling meat prices in the first weeks. In Spain, it is feared that the price will drop further in early 2018, beyond the sharp correction that the Spaniards have already suffered.

The prospects for 2018 are throughout Europe not very positive. The Danes report one growing sow herd (of 3%), while productivity also increases. More pigs are also on the way in the United States. It could well take until March before pig prices in Europe manage to achieve serious gains again.