The autumn market is strongly price downward in Spain just like in previous years. Hog prices in 2011 have had a weird behaviour in 2011; they have had too steady in periods when historically it is a bullish market with higher prices. In fact, they were 20 weeks flat during the summer. The good news is that the seasonal price drop is not going to happen as it has been in recent years. Spain has been 'cushioned' by its counterpart European countries where the disparity of prices was marked during the summer months. Spain as an EU strong exporter country has gotten some relief and adjustment from the European market itself. Spain has played the game with price volatility in Germany and France specially allowing Spain.

The export market has saved Spain in some ways to go even deeper in terms of domestic prices, given it some stability and regulating the pork flow in a better way. The following graph illustrates better this year Spanish market compared with previous years. The trends are different from last year.

In other countries like France and Italy, the price rises because there are fewer pigs than last year, meanwhile in Germany and Spain where the production of pork has been higher than the last year, the price does not drop dramatically – just around €0.008 – or even keep the same price of the previous week, depending basically on demand.

As for the cost of production, grains prices have generally fallen. Wheat has plunged to about €200 per tonne at the port, corn is close to €205 to €210, depending on destination, and barley has going down even deeper, around €205 to €210, according to destination. Most of the grains have dropped prices, but especially corn.

Further reductions in grain prices are expected until the end of this year when the corn crop will happen with a good yield forecasted. The North hemisphere is getting an excellent corn crop with a stronger US dollar pushing even lower the grain prices in Europe.

There is no party yet – there is a feeling of cautious relief, taking a second mouthful of air while the wild card in this game is always the grain price. However, the slow decrease in the feed cost has helped to compensate lighter hog prices. There is no financial benefit from the pork production but no one is losing money either, which is excellent news for this time of the year. The other side of the economic balance is a little darker; with almost no access to credit and a financial situation more than complicated, there are many clouds on the horizon.