Analysis Pigs
High pig prices are balancing on a thin rope
Christmas is fast approaching; supermarkets must be stocked with hams on the bone and pork tenderloin before that time. That means a lot of work for slaughterhouses. As a result, meat prices are rising explosively. The high pig price is leveling off, after a rapid increase. Expectations for 2020 are positive, although the danger of African swine fever lurks around every corner.
Pig prices have risen sharply in recent weeks, mainly as a result of the shortage on the meat market. The Chinese and European buyers are fighting for the same 'pork bone' and that has pushed prices up sharply. DCA Markets started monitoring meat prices a few months ago. The changes show that the meat market has been in flux for some time now. This is not surprising, however, because the global meat shortage was not often as great as it is now.
The reason for this lies largely in China, where tens of millions of pigs have now been culled due to the outbreaks of African swine fever. The meat shortage will rise to 2020 million tons in 20, according to Rabobank's figures.
China demands luxury meat parts
While China previously mainly imported by-products (such as the heads and legs), it has recently started offering luxury pork parts as well. This means that the European meat market is being 'robbed' by the Chinese. Increasingly, half and whole carcasses are shipped to China.
The export figures to China speak volumes. In the first 3 quarters of 2019, sales increased by more than 50% to 1,5 million tons, compared to the same period in 2018. Spain is benefiting the most from the Chinese demand recovery, followed by the Netherlands. Dutch exports increased by 9% in the first 22 months of this year to more than 400.000 tons.
Meat market is working towards a climax
The Chinese question is approaching a climax. Containers can still be sent until about mid-December, which will then be on land for the celebration of the Chinese New Year (Saturday 25 January). After that, demand will drop slightly, although China will undoubtedly remain on the market next year. This is because of the large meat shortage.
Demand in Europe is also moving towards the traditional peak at Christmas. The pork tenderloin is apparently still a favorite with the Dutch. The DCA meat mutation for the long hare also increases this week by €0,43 per kilo. Since the beginning of November, the tenderloin has increased by almost €1,50 per kilo. Other parts (such as the hams, waist, shoulders and attorneys) have also increased considerably, but now show a flattening picture, unlike the leapfrog.
Pig price historically high year out
Pig prices are also declining, after the significant growth spurt in recent weeks. For example, Vion's quotation is stable this week at €2,12 per kilo. With 1 full slaughter week to go, the supply is increasing. During the broken weeks around Christmas and New Year, the meat-processing industry is at a standstill and the demand for raw materials will level off. This is expected to put some pressure on pig prices around the turn of the year.
However, it is unlikely that pig prices will lose the 'Christmas bonus'. There are no signs in either the Netherlands or Germany that the supply will be excessively generous in the first months of 2020. In addition, China is still short of large volumes of European pork. The tenderloin will remain scarce in the new year, when China continues to import carcasses.
Danger lurks
In short: expectations for 2020 are high. This is also reflected in the record high piglet prices† The only thing that can throw a spanner in the works is African swine fever in Germany. The virus has now been detected just 40 kilometers from the border between Poland and Germany. It seems only a matter of time before the animal disease advances to the west. In the event of an outbreak, the German pig market will be disrupted and the consequences will also be felt in the Netherlands. The high prices are therefore balancing on a thin rope.
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Wouter Job
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