Analysis DCA Benchmark Price - Pigs
Tight pig supply offers something to hold on to
Pig prices have risen rapidly in recent times, but the end of the Christmas rally has been reached. Now we are wondering whether the market can hold on to the higher levels after Christmas. A persistently tight pig supply offers prospects in this regard.
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The fact that the German pig price (VEZG) leveled off on Wednesday is seen as disappointing in the sector. More had been hoped for, given that pigs were trading at a high price on the Internet exchange. Also today, Friday December 9, another 3 cents were added, raising the quotation to €2,13 per kilo. At the same time, there is a lot of resistance from German slaughterhouses. The high prices hurt, partly because the Chinese market is still closed due to African swine fever. In the Netherlands, all slaughterhouses unanimously increased their prices by 2 cents. This has tightened the DCA Stock Exchange Price 2.0, as it rose an extra cent last week.
In the meantime, Christmas is fast approaching. This has an impact on the meat market. The Christmas demand has largely been met, slaughterhouses indicate. The last spot market will take place in the coming weeks. Demand from retail was not disappointing, as evidenced by the higher meat prices. The question now is whether meat prices can hold up after Christmas, but that is a difficult question to answer.
Continued tight supply
The Dutch slaughter figure rose again last week to above 320.000 pigs after an inexplicable dip the week before. Traders describe supply as persistently tight. This offers prospects for maintaining the Christmas bonus, but then meat sales should not collapse in the new year. Although the holidays partly fall on a weekend, sales will stagnate between Christmas and the New Year. The meat processing industry then shifts down a gear.
A calculated setback is that sales to China are currently weakening. As always, demand is building towards the Chinese New Year, which takes place on January 22. The last shipments have recently taken place. Chinese people will continue to consume pork in the new year, so demand will not dry up. However, Chinese buyers have to get used to the higher meat prices in Europe, the Chinese are not used to inflation rates of more than 10%.
Based on the statements, the DCA Exchange Price 2.0 levels off at €1,92 per kilo for the slaughtered pigs. The price of live pigs remains at €1,51 per kilo.
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