Analysis Pigs
'Up to 15 percent fewer pigs due to buyout'
European pork production increased in the first half of the year. Rabobank expects this dynamic to turn and the slaughter rate to decrease. In addition, the bank expects the pig price to have bottomed out. In the Netherlands, the bank predicts a further decrease in the pig population.
In the first half of 2024, pork production increased by 3%. About half of the growth is due to a higher number of slaughters. The other half of the growth follows higher slaughter weights. This higher supply has led to higher prices on both the pig and piglet markets.
Decreasing supply
Rabobank expects the increase not to continue. In total, the pig population in the European Union will decrease by 0,5%. The bank expects the number of slaughters to continue. In France, the number of slaughters will decrease by 0,5%. The Netherlands and Italy lead the decline, each with a decrease in the number of slaughters of no less than 6%. In the Netherlands, this is only the beginning of the decline. Rabobank expects the pig population to decrease by 10% to 15% in connection with the buyout arrangements.
The rest of the potential growth is not forthcoming due to a greater disease pressure. PRRS continues to cause problems in Spain, while African swine fever disrupts the markets in Eastern Europe and Italy. In Germany, Denmark and Poland, the bank still predicts increases. Our eastern neighbours will slaughter 1% more pigs, the bank expects. The Danes are also slaughtering 1% more. In Poland, the bank even predicts an increase of 3%.
Slaughter prices bottom out
Pig slaughter prices are stable after the summer drop. Prices in the Netherlands and Denmark are now below the level of the rest of the EU. According to the bank, this is the result of a high dependence on exports. The bank notes that margins in the sow farming sector in particular have decreased. However, the bank believes that profits for sow farmers are almost certain due to favourable prices in the first half of the year.
Further declines are unlikely, according to the bank. The supply is becoming considerably tighter and the seasonal patterns are favourable for the pig market. Pork is more popular in the winter and the market is also already looking ahead to Christmas.
Exports decline
The decline in exports has not yet ended. In total, exports increased by 1%. Exports to China in particular are disappointing. Total exports to the Asian country decreased by 7%. This can almost exclusively be attributed to the decline in muscle meat. This export decreased by 13%, while exports of by-products increased by no less than 23%. Exports to other destinations increased. Exports may improve in the second half of the year. Rabobank expects the country's import needs to increase.
Whether Europe can actually benefit from this is the question. It is not clear how long China will allow the export of pork. In addition, competition from outside China is increasing. Production in the United States increased by 2024% in the first half of 2. Exports from Brazil increased by 3,5% in the meantime.
Feed costs increase slightly
For pig farmers, feed costs will increase slightly, the bank predicts. Prices of agricultural raw materials will increase slightly in the second half of 2024. Prices of soy and corn are quite high in North and South America due to dry weather, the bank indicates. However, a disruption of the trade in soybean meal is unlikely. In the short term, the European Parliament will vote to postpone the deforestation law. If that happens, the feared significant drop in the supply of soybean meal will probably not occur for the time being.
Matthew Bremer
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