There are some profits while still deals with higher grain prices. Actual prices surrounding €1.30/kg has produced some relief against the €1.17/kg cost of production.

These are good news because is from here when the domestic market in Spain starts to climb its hog prices. Exports are steady and strong and in addition carcass weights are lighter and in short supply than a year ago. The current situation is not the same all across the country. Northeastern packing plants available for international markets are doing better than domestic dedicated Spain’s Central region integrators. It is in this geographical area where the financial crisis hits harder the nation.

On the other hand this year we are observing atypical differences among UE countries in terms of price behavior. France, Germany and Spain have been rotating the first place as higher hog price country. Traditionally this rotation has been seasonal with Spain (in this season) as front runner rather than Germany, country which is getting momentum right now. France which used to be the higher price a few weeks ago is now the lower one a expenses of Denmark which has been going up over the last two weeks. Spain itself is bizarrely stable when normally at this time of the year is Europe’s highest price. We believe this also good for Spain’s pig industry because Spanish pork is getting more competitiveness compared with other European producers.

Weekly price evolution in Germany, France and Spain 1st Quarter 2012

In contrast with the excellent weather that has push the barbecue season ahead is making headlines for a decreasing in crops this year. The lack of rain it is getting extreme and weather forecasters are predicting one of the biggest droughts this year.

Another important aspect that is touching the industry this year in Spain is the enforcement of the Animal Welfare Regulations by adjusting old farms to the new set of laws causing a future shrink in pork production. The main change is at the gestation barns where the sows must be housed in groups. Crates for pregnant sows or more that 28 day are not allowed anymore starting 1 January 2013. Also the required space per sow has been regulated which technically means that you need to invest money in your farm to adapt it or close it. Some of them are doing renovations but certainly a huge number of them are not able to do it. It is estimated that about 40 per cent of the sow units should be adjusted by the end of this month. Everyone is talking about decline in Spain’s pig production by the end of the year.

In spite of all of the inconvenient Spain’s pork producers keep up their costumed good sense of humour and moderate optimism. Their focus in international markets and still chances are to get better prices in the near future for their product.