Analysis Pigs
Vion's move typifies tightness on pig market
Even in broken slaughter weeks, there are not too many pigs in the Netherlands. Moreover, the supply will not increase in the coming weeks. For slaughterhouses in our country, there is little choice but to increase the purchase prices. With or without retroactive effect, as was the case this week at Vion...
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Initially, the country's largest pig slaughterhouse announced an unchanged pig price last Wednesday. Later, the quotation was increased by €0,05 to €2,02 per kilo, after it became known that other slaughterhouses had also adjusted their quotations. The only remedy for a tight supply is competitive prices. Pigs that are too expensive are apparently better than empty slaughter shackles. Be that as it may, the market is saying that Vion is having trouble filling its schedule from week to week, although this is not an easy task for other parties either, it is said. The loss of slaughter days can only partially prevent the pain.
For pig farmers, the position in the chain is strengthened by the shrinkage. In a market with more pigs - like a few years ago - this reverse 'race to the bottom' would most likely not have happened, because at that time the wider supply often had a dampening effect on rising sentiment in the market.
Tight supply drives up market
In any case, the current price increase is due to a tight supply of pigs. Meat prices are increasing here and there, but cannot absorb the increase in pig prices. Since the first week of May, the raw material value of the carcass has increased by approximately €0,025, as shown by the meat changes from DCA. This while pig prices have increased by an order of magnitude of €0,10. The fact that the German pig price did not increase further this week must be seen from this perspective.
However, it is expected that pig prices will take further steps in June. The supply of pigs is tight enough for that and meat consumption will probably increase when temperatures rise. There are still six full weeks until the start of the summer holidays, when demand often drops somewhat.
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The Dutch pig trade opts for further increases. Based on the data, the DCA Exchange Price 2.0 for slaughtered pigs increases by €0,01 to €2,10 per kilo. The price of live pigs also increases by €0,01 to €1,65 per kilo.
Click here for an explanation from DCA Market Intelligence on the listing.