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Dutch pig market feels eerie

14 January 2022 - Wouter Baan - 6 comments

The pig market started the year more difficult than anticipated. A cocktail of factors means that prices are under pressure. In Germany, the large slaughterhouses have taken matters into their own hands and cut prices sharply. How will the Dutch market respond to this?

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The fact that Tönnies and Vion Germany lowered the pork price by 3 cents to €1,17 per kilo earlier this week came as a bombshell. Few market insiders saw this move coming. Especially because the slaughterhouses already have one haus price compared to the leading VEZG quotation, which still stands at €1,23. It should become clear next Wednesday how the German market will respond to this. There is little chance that the slaughterhouses will give in, there are rumors that they actually wanted to go back to €1,13.

Omikron provides tension
The unrest in Germany has spread to the Netherlands. There is unrest in the meat sector about the contagious omikron variant that has spread in Australia and the US leads to problems. You can almost set the clock to the fact that the slaughterhouse schedules are also in disarray here. There is no reserve bank of employees due to the already large staff shortage. The outbreak of African swine fever in Italy is also disrupting the market and causing uncertainty. 

Looking at the pig supply, it is desirable that slaughterhouses do not have to scale down, but continue to slaughter smoothly. Traders describe the supply as ample, which can be seen as the aftermath of the December holidays. The more than 300.000 pigs that were on the hook last week were not enough to remove the oversupply. 

Meat demand very weak
Apart from corona, slaughterhouses do not feel the need to put the pedal to the metal, because meat demand will be at a very low level in early 2022. Both in Europe and the Asian markets. It leads to falling carcass part prices. The ample supplies that were already there did not help.

Despite the pressure, Dutch pig traders are reluctant to anticipate possible reductions from Dutch slaughterhouses with the DCA Stock Exchange Price 2.0. These seem to be coming in the coming week, all in all the market feels a bit eerie. However, based on the statements, the DCA Exchange Price 2.0 can remain at €1,19 per kilo for slaughtered pigs, while the price of live pigs remains unchanged at €0,90.

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