The year 2012 is a positive on the balance sheet looking at margins, but there is an increasing need for capital for two reasons:

1. Increase in feed prices
2. Investments are needed to adapt farms to the new welfare rules.

This means that producers with higher financial capacity finished the year stronger and while others were weaker in the same market. Looking to 2013 the price in the first week of year was around 1,3 €/kg (USD 78.38 ?/lb.) Trends are different in other EU countries, Denmark & Spain keeping stable, UK & Italy increasing and Germany & France with decreases in price.

Factors affecting the future

• Re-valuations of by products and de-valuation of primal cuts.
• The internal market is weak, the purchasing power loss of the average Spanish consumer, the economic recession (The recuperation is expected in the first quarter of next year), more unemployment and credit restrictions.
• Less offer, feed price and adaptation to welfare rules implicate a reduction of number of sows in EU. Production must decrease or keep to the same level with less sows.
• The key will be the export. If EU exports keep up to the levels of 2012, there will probably not be pigs to satisfy the demand. It is important to note that slaughter capacity has increased in Spain in the last few years and this factor will probably start a fight for the supply of pork. At this moment there is a higher offering of live pigs, but the slaughter continues buying pigs because the budgeted price for the coming month is higher than current price.

In summary, the market is playing to find the minimum pig live price before the expected price increases when we restart exporting to expected levels. The expectations are good if the export is kept to an acceptable level like is budgeted, but in this subject other countries also have a say and there are always some uncertainties for the high dependence of exports.