Spain Hog Markets

13 September 2012, at 8:20am

SPAIN - Hog prices in Europe have raised to historical records this summer, and continue to climb, according to Javier Santamartina, Genesus Rep for Spain, Portugal and Italy.

You can observe the unusual direction of the price this year (green line) compared to 2011 (red line) and 2010 (blue line). All of this is happening at the expenses of the feed cost (and pork demand obviously).

Germany, France, Denmark, Holland and Spain are the countries with the highest prices in Europe over the last 10 years. Another interesting point for those who love stats: it has been the first time in the last 20 years that price kept escalating every single week.

Spain’s hog prices €/kg pig live per week. (2010, 2011 and 2012).

Hog supply is not enough to make available demand of pork of the packing plants. The pork industry in Spain does not have any pound in storage and specific cuts like bacon have an extreme high demand (certainly higher than supply). In Germany for example some packing plants have tried to get the higher prices stopped by reducing the price on some cuts like loin. On the other hand countries like France and Spain with little hog supply to kill have started to shrink hogs weight dramatically. The average weight for the last few weeks was 105Kg/head (230 lb). the industry expects to see even lighter pigs hitting the market on the coming weeks. We have had weeks of just 101 Kg/head (220 lb) average at the end of the summer. Pietrain like hogs are getting price penalty at the packing plant to be deficient in bacon, intramuscular fat and showing too lean conformation at lighter weights.

It seems like pig price will continue greater than ever in consonance with feed cost situation. Grains to produce animal feed have also been at record prices. Soya bean hitting 600 €/ton and corn around 270 €/ton. The bad news coming from Russia and North America about market contraction will be reflecting higher prices in Spain for the following months.

Not only cost of feed has caused this atypical phenomenon in the Spain’s hog industry. We have to blame the Euro/ Dollar exchange rates for these record prices as well.

Unfortunately this –apparently- good price situation is not enough to clean the dust and fill the big hole the producers have experienced over the last few years, the pork industry needs more money and the financial situation in Spain continues in the intense care room. It is not clear yet what is going to be the domestic market reaction facing an exaggerated augment of food price. Pork price have suffered a government hit of 2% tax increase on all by-products in Spain, increase that will not been reflected in the producer’s pocket. Also the farms are getting stronger pressure from the EU to be modified to fit the new welfare rules. The point is the producers do not have enough money to invest on their facilities while the feed price is too high. They will have to make a decision between barn renovations or feed their pigs! The producers are alert while the number of sow continues diminishing.