Analysis Pigs
Breathing space for butchers after exhaustion
After a period of almost weekly price increases, the pig market is shifting down a gear. Due to the tight supply - which leads to extremely low slaughter numbers - the undertone on the market is still good, although further price increases are becoming less obvious.
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These are challenging times for slaughterhouses that are causing headaches for many CEOs in the industry and perhaps even more so for the financial department. The recent price rally is seen as a war of attrition, but in terms of price we have to be in the leading group to keep the slaughter lines filled to some extent. At 274.718, the Dutch slaughter figure has fallen to an extremely low level for full slaughter weeks. German slaughterhouses barely exceed 700.000.
In the current market, slaughterhouses can hardly afford to record abnormally. Vion tried, but had to back down. German slaughterhouses are currently not considering announcing a Hauspreise. The fact that the German pork price did not rise further this week was probably a relief for slaughterers, who are thus given a breathing space.
Difficult to estimate
It is still difficult to estimate whether pig prices will increase further in the coming weeks. The supply is extremely tight and is likely to become even tighter. A lot will also depend on meat sales. Although the summer weather is fine, the demand for barbecue parts is now declining slightly, according to insiders. Demand often 'explodes' at the start of the season and then drops back down. This can also be seen in the carcass parts prices, which mutate more slowly. A price increase is highly dependent on European consumption, because the export markets outside of it have not been stimulating for some time. European parties are much more expensive than the American and Brazilian competition. In addition, the euro has recently risen in value.
Holiday season coming up
Historically, the pork market tends to move calmly during the holiday season. When a few percent of Dutch people leave the country, this is clearly noticeable in fresh segment sales. A price increase has not occurred in that period over the past five years. However, the market could also take another step in the coming weeks, because seasonal patterns are becoming increasingly less observable due to the extremely tight supply. This is also evident from the abnormal movements on the piglet market.
Next week the DCA Exchange Price will remain at €2,37 per kilo for slaughtered pigs. The price of live pigs is also the same at €1,88 per kilo.
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