Inside Pigs
The week you know is coming
Pig prices seem to be set in concrete and impossible to move. However, the threats of impending price cuts have been around for several weeks. What can be expected in that area for week 29?
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There is no doubt that the current price movements are remarkable. All the ingredients to achieve upward price movements were present. A fantastic (sports) summer, in combination with a limited pig supply, should have caused prices to rise. However, the highest achievable is already one for the seventh week in a row unchanged listing.
Trust falters
The comments from slaughterhouses indicate that confidence in the pork market has been wavering since the beginning of June. For example, there was and is pressure on the sale of necks (a barbecue product par excellence) and there were large meat stocks. Sales of hams experienced a temporary revival, while sales of bacon with effort remained stable.
As the summer holidays approached, price pressure increased on almost all components. The summer recess of the meat processing companies will not reduce the pressure on prices in the coming weeks. Yet all Dutch and German slaughterhouses recorded unchanged this week.
Don't be the first to offer a price reduction
It seems that slaughterhouses do not want to outdo each other by being the first to offer a price reduction. Slaughterhouses are looking at where they can work more efficiently, with the answer to the current malaise being sought in reducing slaughter numbers.
For traders who only operate on the Dutch market, a message that only 80% of the expected number of pigs can be delivered is quite a downer. Some traders still have the option of making additional deliveries to Germany, but those who do not have that option will have to disappoint masters. By reducing slaughter capacity, the pig supply will logically increase.
Pressure is felt
Before week 29, Dutch slaughterhouses are unanimously of the opinion that the impasse that has been dragging on for weeks must come to an end. A lot of pressure is being exerted on traders to adjust prices downwards before week 29, as it is impossible to work with the current prices. With the reduction of slaughter capacity, the pressure on trade is increasing and being felt.
It was already clear from DCA Markets' explanation of this week's DCA Stock Price 2.0 that the lead for a price reduction would not be taken by the trade. That intention must be abandoned. For week 29, DCA Exchange Price 2.0 comes with a change for slaughtered pigs of minus €0,03, bringing it to €1,35. The adjustment of the price for live pigs amounts to minus €0,02, causing the price to drop to €1,08.
| DCA Scholarship 2.0 (week 29) | Price range | Number of problems | Average |
| Gender €1,35 (-0,03) per kilo | € 1,35 - € 1,38 | 13 | €1,364 |
| Live €1,08 (-0,02) per kilo | € 1,07 - € 1,10 | 10 | €1,085 |
| Explanation of DCA Markets: It finally happened. The continuing stream of messages from the slaughterhouses that it is impossible to work with the current pig prices seems to be breaking the cordon of the pig trade and putting an end to stable pig prices. To reinforce the sound of the impending price reductions, the slaughter capacity for the coming week will be reduced. There appear to be no obstacles yet for traders who also have sales in Germany and sometimes more pigs can be delivered than planned. However, a few traders indicate that they will slow down on deliveries at the beginning of week 29, which could indicate a German price reduction. Although pig traders are not in favor of leading the way with price reductions, the image of slaughterhouses leading them in this regard with a steep reduction is not an attractive one. Providing an opening is the only avenue left for trade and possibly also the wisest, in order to maintain some control over price formation. To do justice to the current market situation, an additional mutation has been chosen and this deviates from the averaging of the trade statements. The fact that a decline in pig prices will not be without consequences for the pricing of piglets and the sale of meat cannot be stopped. It is what it is. | |||