On Thursday, July 17, the primary drop of the yr within the dwell pig value occurred in Spain (except the 2 adjustment drops in January, after the Christmas holidays). We had been coming off the annual report of €1.815/kg dwell. Simply six weeks later, the present value is €1.643, a cumulative drop of greater than 17 cents, which is atypical for July and August. What is occurring? How can this be defined?
4 weeks in the past, we talked about that there have been a number of compelling causes for the worth within the Spanish reference market (Mercolleida) to fall. We summarize them under:
- For a number of weeks, the Spanish value was greater than 28 cents per kg (dwell) above the German value; historical past reveals that this distinction isn’t sustainable over time.
- Germany’s value unexpectedly dropped by 15 cents (carcass) within the first market session in July: this transfer dragged pig costs down in neighboring international locations and brought about uncontrolled declines in pork costs.
- Spanish pork exports to 3rd international locations are struggling as a result of excessive aggressiveness of Brazil, whose herd is rising quickly, which is consuming into our market share month after month.
- We defined that in week 29, Spanish slaughterhouses posted their worst outcomes ever: with such colossal losses, their solely various has been to cut back exercise drastically to attenuate harm. They’ve utilized themselves to this activity. On the finish of all these reductions, the end result has been that there is no such thing as a scarcity of pigs for a a lot decrease circumstantial demand.
Comparability of pig costs in Spain, Germany, and Brazil over the past yr.
The present sustained decline may be understood as a pendulum swing ensuing from a protracted interval of comparatively excessive costs in comparison with different European gamers. Costs had been too excessive for too lengthy and are actually shifting from one excessive to the opposite, looking for to revitalize slaughter flows.
Quite a few livestock farmers report a transparent enchancment within the well being of the Spanish herd; it will probably due to this fact be deduced that the provision of dwell animals has improved and can enhance considerably between now and Christmas. Costs will fall as a lot as crucial. We consider {that a} value of round €1.45/kg dwell weight in mid-December is lifelike. That is what some main operators have advised us.
We consider that the outcomes of the processing business (primarily sausage manufacturing) will enhance considerably within the second quarter. It can’t be in any other case, and it’s about time that this occurred.
The numerous declines recorded to this point haven’t been sufficient for many slaughterhouses to interrupt even; there is no such thing as a doubt that the awful outcomes have improved, however not sufficient to date. The pig value will fall additional.
Pork costs nonetheless have not discovered secure footing; we’ll see if folks’s return to the cities after the summer time trip (at all times noticeable in Europe after August 15) serves to carry some stability.
With herd well being enhancing considerably and the variety of sows in manufacturing nearing an all-time excessive, it’s doubtless that between now and the top of the yr we’ll see a number of weeks with slaughter figures approaching (and even exceeding) the best ever recorded. It’s extremely doubtless that pork will proceed to be ample in surplus inside the European Union.
In the USA, the pig value is between 10 and 20 euro cents per kilogram carcass above the carcass value in Germany. The market stays excessive as a result of important decline within the present provide of dwell animals. U.S. pork isn’t accessible (or whether it is, the quantity could be very restricted) to compete with us in Asian markets.
On Thursday, August 21, the joint assertion on the brand new commerce framework between the EU and the USA was introduced in Scotland. The brand new scenario implies that EU pork will face a 15% tariff to entry the U.S. market, whereas U.S. pork can be granted preferential remedy. Many particulars nonetheless should be finalized (quotas? discount of well being necessities? … ), however the normal impression all through Europe is that we’re shedding out. We’ll return to this matter later, as soon as the remaining particulars have been clarified. Briefly, that is the information of the month, and it isn’t excellent news.
In Brazil, the worth has risen by round 20 cents per kilogram because the low level in mid-July. It’s at present round €1.40 per kilogram. It’s nonetheless significantly cheaper than in Spain, however the distinction has narrowed considerably.
In August, we remorse to report a hearth at two industrial swine corporations in Vic, within the space referred to as “Illa Càrnica.” We hope that the harm may be overcome shortly.
A season is approaching with dwell costs extra in keeping with manufacturing prices. Nothing lasts eternally. Be that as it might, this yr can be one for Spanish livestock farmers: the numbers communicate for themselves.
We’ll conclude by quoting the phrases of the American chess genius Robert Fischer, who grew to become world champion: “You need to have the preventing spirit. You need to power strikes and take probabilities.” We agree with these phrases and take into account them to be utterly relevant to life itself.
Guillem Burset
