Inside Pigs
The pig market is suddenly very hot
Pig prices have started to rise and the end is probably far from in sight. The mood on the market has completely turned in favor of the fattening pig farmers.
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Last week we wrote that there more visibility is on higher pig prices and that is clearly reflected in the quotations this week. The German pork price (the VEZG quotation) rose by €0,03 to €1,43 per kilo and this movement was tacitly followed by the large slaughterhouses. The Internet Exchange slightly surpassed this on Friday, March 15: the quotation increased by no less than €0,07 to €1,54 per kilo. This result suggests further increases.
It is now no open secret that demand has exploded on the meat market. This development immediately exposes the tight German pig supply. The meat market has changed from a supply market to a demand market in no time. There is good demand for European meat parts, but the mood is mainly created by wild demand from China.
What does AVP lead to?
That this would happen was already longer the expectation. Due to the outbreak of African swine fever in the country, Chinese pig farmers initially started offering pigs en masse; that led to an oversupply. We are now one more round of manure and the Chinese supply is starting to dry up. Analysts in China even assume one production decline of more than 20%. That indicates an incredible shrinkage, considering China slaughters 700 million pigs every year.
It is not (yet) clear what this will mean for European (and American) exporters in the coming months. It does appear that pig farmers are winning the straw; especially because the supply in Northwestern Europe is tight, due to shrunken pig numbers Germany en The Netherlands.
German slaughterhouses are falling short
Now that China has clearly entered the market, slaughterhouses are aiming for full slaughter hooks. According to the Central Organization for the Meat Sector (COV), China requires that exporters can only export pork from animals raised domestically. This means that German slaughterhouses may only deliver pigs of German origin to China. The same principle applies to Dutch slaughterhouses, only with Dutch pigs.
This is where the problem lies for many Germans, because they import 25.000 to 50.000 live fattening pigs from the Netherlands every week. They cannot meet the Chinese demand with this supply alone. Since the slaughter figures remain below 950.000 heads every week, they are short of pigs. Dutch slaughterhouses mainly process pigs from their own country; so the problem does not arise here.
DCA Exchange Prize 2.0 follows suit
Although spring has yet to arrive, the pig market is already blazing hot. At DCA-Markets, traders therefore opt for large increases. The DCA Exchange Price 2.0 is in line with the changes in Germany and increases by €0,05 to €1,37 per kilo for slaughtered pigs. The price of live pigs increases from €0,04 to €1,10 per kilo.