ANALYSIS - Danish pig prices are forecast to rise next year with a continual drift upwards as the year progresses, writes Chris Harris.
In 2010, the average price for the year was DKK10.10 and this rose last year to DKK11.11.
Next year, analysts at the Danish Agriculture and Food Council predict that prices will rise to DKK12 with them hitting DKK12.50 and DKK12.25 in the third and fourth quarters of 2013.
However, if slaughterings in Germany, France and the Netherlands continue to drop, the forecast for Danish prices is expected to go higher, according to Karsten Flemin, Senior Consultant (Market Analysis) at the Danish Agriculture and Food Council.
Across Europe, only Spain is expected to see an increase in pig meat production this year compared to 2011.
While Germany's pig herd is expected to fall in numbers by three per cent from 47.7 million head to 46.3 million and Denmark, France and the Netherlands are all expected to see a two per cent drop in their herd numbers, Spain is predicted to see a rise of four per cent in numbers to 42.3 million head from 40.8 million.
However, the country that is seeing its pig herd numbers fall most sharply is Poland, where the number of pigs is expected to drop by seven per cent from 19.7 million to 18.3 million head.
Part of the reason for such a sharp decline in the Polish pig herd is the fact that the pig sector is made up of a lot of small farmers, who, because of the current economic climate, high feed prices and the changes to regulations over the use of farrowing crates, will be going out of business.
For Denmark, however, while this year is seeing a drop in pig numbers, 2013 is forecast to see either a standstill or slight rise in production, while all the other countries will have a drop in production.
Again, Poland is going to see the steep slide in production continue with a 4 per cent drop, while France and Germany are predicted to have a five per cent and three per cent drop in numbers.
"Danish prices are going up because EU production is going down," Mr Flemin said.
Globally, pig meat production is expected to rise by two per cent this year although next year production levels are expected to be static, caused largely by the effects of high grain prices.
China is leading the way this year with an estimated four per cent rise in production from 49.5 million tonnes to 51.4 million tonnes.
However all this pig meat is destined for the domestic market.
The USA, Brazil and Russia will each see a two per cent rise in pig meat production this year, while the EU pig meat production is forecast to drop by one per cent.
This fall is expected to continue into 2013 when the US will also have a production drop of one per cent.
Only the three emerging countries - China, Brazil and Russia - will continue their growth only this two is down to just one per cent.
Mr Flemin said the reasons for the differences are that historically Brazil and the US have had low production costs - lower than the EU. Now because of grain prices in particular, the US production costs are equivalent to those in the EU.
As China's production is destined for a growing and wealthier domestic market and Russia is attempting to become more self-sufficient in pig meat, the main beneficiary of the market fluctuations will be Brazil. The lower production costs will give the country greater export opportunities.
The stable production of pig meat in 2013, will mean higher prices in the global market, however and consumption will drop because production will drop.
While consumption may be dropping, there is no fall off in demand from importing countries.
Japan the largest importer of pig meat is expected to see imports rise from 1.254 million tonnes in 2011 to 1.26 million tonnes this year. This level is expected to be maintained in 2013.
China is expected to see imports rise steadily from 1.19 million tonnes in 2011 to 1.215 million tonnes this year and to 1.26 million tonnes next year.
Overall, global pig meat imports are expected to rise from 6.607 million tonnes in 2011 to 6.834 million tonnes in 2013.
With good global trade forecast, the prospects for the Danish industry are expected also to be good and above those of the rest of Europe. If production continues to fall then prices will go up.
The Danish farmers are also set apart from many other pig producers in Europe because they are not affected so much by the high and rising feed costs. Most Danish pig producers are nearly self-sufficient in grain so they do not ]feel the costs in the same way.
However, Mr Flemin said that Danish farmers are only making money out of pig production because they are self-sufficient in feed.
The prospects are also hopeful for the Danish producers because of the good demand prospects in third country markets.