Pig price is now really at a limit

The unexpected increase in the German pig price last week has shaken the market quite a bit. Dutch slaughterhouses did not see this coming at all. For the form, they unanimously implemented the smallest possible increase this week, but that's the end of it. The DCA Scholarship Price could not be tracked. The extreme cost increases in the chain (pork price, energy, CO2, labour) do not allow this, it sounds like. 

The situation is slightly more complex for German slaughterhouses. With barely 750.000 slaughterings, a quarter of the slaughter hooks remain unused. They therefore had no choice but to follow the movement of the VEZG quotation last week. They probably breathed a sigh of relief on Wednesday afternoon that the German price leveled off at € 2,10 per kilo. Never before have pigs been hooked so expensive, not even when China bought carcasses in droves in 2019. Incidentally, some German producer associations wanted to increase the VEZG price further, but there was insufficient support for this.

Momentum gone
At this point, the momentum for further price increases has faded. It is also unlikely that the market will pick up again in the short term. As the days shorten, the uncertainty in the market increases. After all, it remains to be seen how meat consumption will respond in the coming winter to the highest inflation figures since the 70s. As stated before, it can freeze or thaw. Either overall meat consumption takes a hit or pork benefits from the much more expensive beef. Time will tell, for now sales remain fairly stable in the transition period to autumn. However, parties are hesitant to buy up stocks, because of the significantly higher storage costs in cold stores.

Exports to countries outside the eurozone are encountering headwinds as the Japanese yen and the British pound have weakened against the euro. At the same time, it appears that the British pig population has decreased further (-3%), which means that on paper there is a greater need for imported meat. China has recently reintroduced pork from state reserves to curb the pig price. This is a signal that consumption is not disappointing. 

Pig supply is rising again
In the meantime, the supply of pigs in the Netherlands is increasing again, which is appropriate for this time of year. For the first time since mid-June, the slaughter figure rose again above 300.000 last week. A further increase is likely, unless traders decide to bring more pigs to Germany because the pigs there - on paper - yield more. The 5D strategy means that German slaughterhouses are less able to handle Dutch pigs, especially because many Asian sales destinations are not accessible due to the outbreaks of African swine fever in the country.

Due to the increasing supply and the uncertain meat market, a further rise in the pig price is a utopia. As a result, the DCA Fair Price 2.0 remains at €1,96 per kilo for the slaughtered pigs. The price of live pigs immediately mutates at €1,56 per kilo.

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