Analysis DCA Scholarship Award
Better meat sales too early for pig price rise
The demand for pork shows cautious improvements. However, more fireworks are needed to achieve higher pig prices. Moreover, the supply of pigs in Northwestern Europe is still on the generous side.
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The hunger for higher pig prices remains strong in the primary sector, despite the market already taking major steps upwards earlier this spring. Because of the big increased feed prices pig prices must rise above €2,10 per kilo in order to be able to cover the costs on average. At the moment, the gap is still quite large. The trendsetting German pig price (VEZG) again this week stuck at €1,95 per kilo.
The lukewarm demand for pork is the bottleneck in the market, all the more so because meat stocks in Europe are amply sufficient for the time being. Although the demand for parts such as hams and fillets is improving, this does not really increase the value of the carcass. Shoulders and waists move sideways this week. Meat sales receive support from the festival season, now that the corona measures have been abolished. On the other hand, it is often still too fresh for the BBQ in Northwestern Europe.
Wide range of pigs ready for slaughter
The pig supply is labeled as ample by pig traders, fueled by two broken slaughter weeks in the Netherlands. This is also reflected in the slaughter figures, which fell below 250.000 in the week after the Easter long weekend. This week the numbers probably won't turn out much higher, which means that an 'extra' 100.000 pigs will have to be slaughtered in the coming weeks. Normally, the slaughterhouses in Germany stop the slaughter line on May 1 (Labor Day), but that now falls on Sunday and is therefore not disruptive to the market. Although the slaughter capacity there has not been used to its full potential for quite some time, there is no mention of a shortage of supply. On the contrary.
In short, the meat sales are not yet able to make a fist and the supply is more than adequate for the slaughter plans. As a result, the DCA Stock Price 2.0 only has a sideways movement. The price of slaughtered pigs remains €1,72 per kilo and the price of live pigs €1,34 per kilo. It will probably take a few more weeks for the market picture to deviate from the current status quo.
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