Six reasons why pork prices are falling

Pig prices already fell sharply at the beginning of July and the pressure is again great in the last week of this month. For example, Vion lowered yesterday the weekly quotation by 5 cents to €1,91 per kilo, after there were already signals last week that this step was inevitable. The spring profit that the listing had built up is therefore completely off the table. Other quotes in Northwestern Europe are likely to follow the same downward track later this week. This can definitively be concluded that the market cannot live up to the often high expectations. Boerenbusiness list the causes.

1. Weather not cooperating
Perhaps the most obvious reason is the weather. It has been historically wet in our part of Europe in recent months. This has really messed up the grilling season. Supermarkets and trading houses were left with unsold meat stocks, which are now being pushed onto the market with discount promotions. This ensured that this week's summer weather did not or hardly stimulate the market. Especially because we are in the middle of the summer holidays and relatively many Dutch people (and also Germans) have often visited sunny places in Southern Europe. This naturally entails a drop in demand.

2. Tensions in the market
The tensions in the market are also a reason for the current price pressure that should not be underestimated. African swine fever has of course been dormant for some time, but is now emerging again in Germany. Large professional pig farms have also been affected. With the jumps that the virus is making through Germany, the Netherlands could also be affected. This makes Dutch slaughterhouses increasingly realize that large frozen stocks are not desirable. In the event of an outbreak, they quickly become less valuable and that dampens the will to slaughter. The higher interest rates in recent years have made financing stocks uninteresting in any case. Also the trade conflict between China and the European Union does not do market sentiment any good, although this does not hinder sales in the short term.     

3. Inflation remains a theme
The inflation storm of recent years may have subsided, but that does not mean that its negative effects on the market are suddenly negligible. In June, inflation in our country was still more than 3%, with food being one of the drivers. In the Eurozone too, the average currency depreciation so far is still well above the 2% target of the European Central Bank. It is not without reason that large food groups such as Lamb Weston, FrieslandCampina and McDonalds recently indicated that inflation still has a depressing effect on sales. Not least because people eat out less often and purchase more selectively for home consumption. Pork sales also appear to be affected by this, although this cannot yet be substantiated with consumption figures.

4. Imbalance between world market prices
When we zoom out on world market prices, we can only draw the conclusion that Europe is not competitive with other suppliers. Compared to other major exporters such as Brazil, the United States and Canada, Europe is lagging behind. This also affects European pork exports. In the first four months of this year, European sales fell by just 6% to 1,46 million tonnes. Compared to 2023, the differences are not that great, but compared to previous years, European volumes are much lower. Major sales markets such as China and Japan have experienced a significant contraction in recent months, which was partly compensated by higher sales to the Philippines and South Korea.  

5. Supply has quietly increased
While demand is suffering from inflation (and sales outside Europe are also under pressure), European pig production has increased quite quietly. In the first four months, the number of slaughters in Europe increased by 2%. Meat production increased by almost 4% due to higher weights. Of the major pig-producing countries in Europe, only Denmark slaughters significantly fewer pigs due to its shrinking pig herd. Growth is taking place especially in Eastern Europe. If we look at more recent figures in our own country, the supply is reasonably comparable to last year. In the first 29 weeks of this year, 1% less was slaughtered than last year.

6. Too high expectations
Last but not least are the high expectations in the market. Hope indeed gives life, but in practice it is often also vain. It was expected that two major sporting events (the European Football Championship and the Olympic Games) would undoubtedly boost meat consumption. Danish Crown even expressed this hope out loud when publishing its annual figures at the end of May. Or was the wish the father of the thought in this case? In any case, the high expectations did not materialize. And although the Olympic Games have only just started, this will no longer make a difference.