Can the pig market shake off the shape dip?

Slaughterhouses have clearly taken the initiative in recent weeks, given the significant reductions they have implemented. Yet it is too simplistic to label them as bogeymen, because they are also in a difficult package. The demand for meat is extremely tepid. There are few signals that point to a rapid improvement in sales. Freezing meat is also not attractive with falling prices and high freezing costs.

Weak export figures
The German pork market fell by as much as 10 cents this week to €2,10 per kilo, the biggest drop in exactly a year. The producer associations in Germany thus complied with the wishes of slaughterhouses, which would otherwise enforce it through a Hauspreise. The sale of by-products in particular puts pressure on the value of the carcass. On the world market, despite the downgrades in recent weeks and the relatively weak euro, Europe is still far too expensive compared to the United States and Brazil in particular. This is also clearly reflected in Eurostat's European export figures, which are almost 30% below last year's level. Since 2014, exports have not been as bad as this year. The Netherlands is doing slightly better than the European average, but that's all.

European meat market oversupplied
The meat that is not exported to the world market must be sold within Europe. Spain and Denmark are considerably oversupplying the European market, it is indicated. This obviously does not do market sentiment any good. The idea is that slaughterhouses in the Netherlands and Germany will become more competitive to regain sales due to the write-downs in recent weeks. Market leader Tönnies has publicly indicated that it is hopeful that calm will return to the market soon and expects stable pig prices. The sounds in the market are that the German pig price will not drop further next week. Historically speaking, it is also likely that the price will not drop. 

Pig supply is growing
In the meantime, the pig supply is growing steadily. There is no longer a shortage, as was the case in the summer, which kept prices in check. With 293.290 pigs in week 40, the slaughter figure was considerably below last year's level, but an upward trend is visible. This also fits with the seasonal pattern. These slaughter numbers are more than enough to make up for the current weak meat sales. Normally the increase in slaughter figures continues until mid-December.

The German price pressure will continue to affect the Dutch market next week. As a result, the DCA Exchange Price 2.0 drops by €0,05 to €2,08 per kilo for the slaughtered pigs. The price of live pigs drops by €0,04 to €1,65.

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