The decline in the pig herd is leveling off

Pork production has fallen by 8,6% in the first seven months in the European Union and the United Kingdom. The decline in the sow herd was much lower due to good slaughter and pork prices. The Dutch sow herd decreased by only 0,6% and in Germany the sow population decreased by 2%, the bank writes. In Spain, France and Denmark the declines were 2,5%, 1,1% and 0,4%.

According to Rabobank, it can be deduced from this that the decline in the pig herd is leveling off. However, according to Rabobank, it is highly unlikely that the pig herd will grow again in 2024. According to the bank, the structural decline in the pig herd in Germany, outbreaks of PRRS (Porcine Reproductive and Respiratory Syndrome) in Spain, and the ammonia reduction in the Netherlands and Belgium are decisive.  

Prices still high
It cannot have escaped anyone's attention that pork prices have fallen sharply this summer. According to Rabobank, Dutch pork prices fell by 12%. Nevertheless, Rabobank emphasizes that carcass prices in the EU in week 39 were still 8% higher than the year before. At the same time, the piglet price was 26% higher than a year earlier. The bank is optimistic about price developments. The bank envisions an increase for the fourth quarter of 2023, due to higher demand during the holidays. 

Although there is also a risk in this. "Structurally lower consumer prices are probably necessary to sustain a sustained increase in demand," the report reads. Sales are hampered by high prices both within and outside Europe. In the first seven months of 2023, pork exports from the EU fell by 5,5%. Brazil seems to be compensating for the volumes. The South American country's exports increased 90.000% by 19 tonnes in the same period. However, the lower exports are compensated by greater sales within the EU and the United Kingdom. In the same period, Dutch sales in this area increased by 10%.

Margins
In addition, Rabobank has noted that pig farmers' margins are declining. Feed prices were on average 20% lower in September than in the same month of 2022 and according to the bank, this is sufficient to compensate for the decline in pig prices. Rabobank expects that this trend will not reverse and writes that the prices of agricultural raw materials are likely to come under further pressure. The supply of corn is increasing and Rabobank writes in the report that Chinese demand for soy is declining. This last point is not supported by everyone. Soy exports from China are currently on the rise.