Spain and EU: Hog Markets

26 October 2012, at 7:28am

EU - After a long period (seven months) of stable price or with light raises, the last two weeks the price of the hog has suffered a light decreases in Spain and in the European Union.

In any case the typical fall of autumn price has not taken place. The decreases in prices have been really reasonable that in other autumns. The reasons of this new situation is due probably to a reduced offer of pork as a consequence of the imminent application of welfare rules, discouragement of the producers who have left the activity and decrease of those who continues for little profitability like last years and an unknowing increases on the cost of production. Seemingly it is a situation that it affects equally to the principal countries of the European Union.

In any case the change of trend is clear and pointing out toward negative figures. The principal reasons have been the recovery of the weight of the animals. Much heavier hogs are going to slaughter house and the fall of the French market that is dragging all. Despite the fact that the pigs look heavier this season it is important to emphasize that the weight continues being under normal records when we compare it with previous years.

The situation is different in other regions of the country like in the North-East of Spain with a larger shortage of animals that in the rest of Spain.

In France the situation continues to be a nasty one with prices plummeting in about five cents of Euro at week. This situation is due to a over offer of pork and little demand at the packing plants level. The slaughter houses are putting pressure to reduce pork prices in order to be competitive in international markets. Hams and legs are getting their lowest prices in the market right now.

In Germany the price situation is much steadier, with a stable demand and 1,05 million of slaughtered pigs/week that is 3,000 pigs more than in previous week but less that in the same week in 2011. In Denmark the price situation also continues firm with an even price.

In Italy the pork industry is suffering from deterioration of tits prices. Last week has been the worse with regard to the last few weeks where the price was held in reserve without apparent problems. The price of the pork has gone down and the packing plants that start to see red numbers have decided to reduce the number of pigs to slaughter. The trend is negative like in the rest of Europe and probably and the decrease in price could be even stronger.

The costs of production, in spite of the decreases on cost of the soybean, have gone up to 15 per cent (soybean price went from 530 €/ton to 470 €/ton). The grains are still very strong with feed at 252 €/ton and wheat around 270 €/ton and only the reduced prices on corn in about 10 per cent.

The pig producers have improved their bank accounts and their debts look cleaner at this moment, which is a good thing. They are doing their last investments to adapt their barns to the animal welfare regulations and they are doing it with moderate optimism.