How the pig price is sprinting to a new record

During the summer months, the pig price usually remains quiet, but that is different this year. The revival is also unexpected. A cocktail of factors has caused market prices to move. The German pig price (VEZG) rose by 15 cents in recent weeks and is now at €2 per kilo. This means that the listing is still three cents away from the record that dates back to December 2019.

Continued warm summer weather
The main reason for the recovery is the warm and dry summer weather of recent weeks. The slowdown in growth that this entails means that the supply has contracted sharply. This can be seen from the declining slaughter figures and associated weights. In the Netherlands, the slaughter figures have been below the level of 300.000 pigs for weeks, but also slightly above the level of 2021. The average slaughter weight has now fallen to less than 98 kilos. The slowdown in growth also reveals a tighter supply of pigs in Germany. Although the slaughter figures have been significantly lower there for some time, the contraction is only really noticeable at the slaughter lines. Pigs that are ready for slaughter are currently very limited. This is also the case in other European countries, such as Denmark.

Meat demand improved
In addition to a tighter supply of pigs, the market is being stimulated by an improved demand for pork. This applies both in Europe and in the sales markets beyond, according to insiders. In Europe, the holiday season is coming to an end and the usual drop in demand that it entails also ends. The beautiful summer weather also stimulates consumption in the form of BBQ meat. Another factor that could play a role is the high beef prices. As a result, consumers are probably more inclined to put the cheaper pork in the basket, although these prices have also risen considerably in recent months. Especially now that inflation will become even more noticeable in the second half of this year, a shift in demand is a factor in the pig market that should not be underestimated. As long as there is a shift in demand, this is in favor of pork. If demand falls on a large scale, the pig market will also be affected by the consequences of the lower purchasing power.

The demand for pork is also improving outside Europe. The Chinese drop in demand is clearly visible in the export figures, but this can be partly compensated by the strongly increased sales in Japan, South Korea and the Philippines. Australia and the United States are also buying larger volumes. The weak euro plays a stimulating role in the background, just as the falling rates for container transport help. There are also hopeful signs for the second half of this year that Chinese demand will recover somewhat.

Sentiment has yet to be confirmed
In the short term, the beautiful and warm summer weather will continue. This puts the pig price in good hands to climb further. Pig farmers hope that the gains made in the territory will not evaporate when the 'R' is back in the month. After all, now that feed prices are on the decline, the air is clearing up. Still, the improved sentiment has yet to be confirmed. After all, when the weather changes (and the supply becomes wider), the headwind is bound to happen. This makes it difficult for piglet prices to push through to higher levels.

Confidence in the sector is still fragile after difficult months, despite pig prices on the verge of setting new records. The pig price will also increase this week at the meat prices that have not yet been increased. The conditions are therefore not boring with late summer on the horizon.