Analysis DCA Scholarship Award
Autumn storm hits pig market
Tension in the pig market has risen quite high, now that the German quotation received a significant ear washing earlier this week. Dutch pig prices are also on quicksand. The question is, however, how much the quotations have to surrender.
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A reduction in the German pig price had been calculated in advance, although the depreciation of 10 cents difficult to digest for many in the sector. The margins of fattening pig farmers will therefore be put to the test, because the Dutch slaughterhouse quotations will also not avoid a reduction next week. However, opinions differ considerably as to how deep the knife should cut here.
'Precarious'
The market situation can best be described as precarious. The pig supply is oppressively large and therefore difficult to place. Slaughterhouses do not want to hook more pigs than is necessary for meat sales. After all, freezing costs a lot of money and is risky. The meat market as a whole is weak, because sales of fresh parts to retail are slow and the food service is also reluctant. Eroding purchasing power due to high inflation is the culprit.
There are some reports that sales of by-products to China are picking up, although this is just as strongly refuted. The Christmas question is still hiding at the moment. Not illogical, given the prices that are under pressure. Buyers are waiting for price developments, knowing that there is still plenty of time to cover volumes. Moreover, demand is often difficult to estimate at this time.
A wide offer
In the meantime, many pigs are being sold to the trade, many more than can be placed. Traders go to great lengths and sometimes drive thousands of kilometers through Europe to find a slaughter hook in Poland or Spain. With more than 317.000 slaughters in the Netherlands last week, capacity is also being used well here.
The German reduction is spreading like wildfire across Europe. The pig price has also corrected sharply in Belgium. The DCA Exchange Price 2.0 is also withdrawn and decreases by €0,08 to €1,79 per kilo. The price of live pigs must drop by €0,07 to €1,41. Moreover, it does not seem likely that the German pork price will suffer further damage next week. You could say that slaughterhouses have now had their way. At the same time, it is almost an illusion to think that the pork price can remain damage-free in the coming months.
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