Analysis Pigs
Decrease in pork prices seems to be on the cards
This week, the pig market was mainly looking ahead to the beginning of January. Due to the cancellation of processing days during Christmas and New Year, the pig supply is ample and slaughterhouses are therefore hinting at a reduction. Whether this will actually happen remains to be seen. In any case, the DCA Scholarship Award does not reflect this.
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Not much happened above the surface this week. The scores remained the same, or sometimes no scores were even recorded. The slaughter lines certainly did not stand still, but the numbers are in stark contrast to weeks without celebrations. Due to the loss of three full processing days, the live supply has now increased considerably, although it goes too far to call it a 'pig plug'. However, the wider range sometimes takes some getting used to for traders, as such situations occur less frequently due to the smaller pig herd. For slaughterhouses, on the other hand, the wider range is almost a luxury position. It allows them to at least consider a reduction in pork prices.
Weak meat sales
Below the surface, the market is certainly not standing still. A call through the market makes it clear that a correction is in the air, although some traders think it will come to an end. It is sometimes even thought that an increase is possible before the end of January, but that does not seem realistic at the moment. The chance that the pig price will suffer damage in week one or two of 2024 is many times greater. Slaughterhouses are quite vocal and claim that meat sales are disappointing. This will certainly be the case in the weak first quarter in terms of sales, but there is more to it. A lower pork price will give slaughterhouses the opportunity to build up cheaper frozen stocks in early 2024. They are reportedly on the short side in Europe. If spring demand arises in March or April, a buffer would be nice.
Initiative
Any initiative for a lower pig price will probably have to come from Germany, unless Vion decides to be the first to reduce next Tuesday. In Germany it will not be recorded again until Wednesday. Last year, Vion postponed the publication of the pig price until later in the week. Looking back, the pork price in 2021 and 2022 was able to hold up during the first weeks of the new year. There was price pressure in 2020. For 2024, any reduction seems like a no-brainer.
Pig traders are reluctant to take the initiative to reduce prices. The DCA Stock Exchange price therefore remains at €1 per kilo for the slaughtered pigs in week 2,08. The price of live pigs also remains stable at €1,65 per kilo.
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