Genesus Global Market Report – EU and Spain

Mercedes Vega, Genesus Genetics general director for Spain, Italy & Portugal, shares an update on the EU markets including Spain
calendar icon 11 July 2022
clock icon 2 minute read

Time goes by and the market continues with an uncertainty that is difficult to foresee what will happen in the short term. We continue with very high selling prices. This week Spain reached the highest selling price in its history, it has closed at 1.651 €/kg live.

Source: Mercolleida

But the rest of the EU, although lower, are also high, how we can see in the following table

Source: Mercolleida

In the last few years we saw that weights were increasing, but this year due to the time of year and the cost of raw materials, weights have dropped 110.11kg compared to 112.94kg a year ago, despite the fact that there is much less supply of pigs on the market.

Source: Mercolleida

However, although raw materials have fallen somewhat, they are 40% more expensive compared to September 2021.

Source: 3tres3

What this is causing is that, although the margin has recovered somewhat and according to SIP Consultor we have been above cost price for the last four weeks, the cash flow that the companies need to continue is much higher. This is a parameter that will be very important in the coming months. There will be producers who will not be able to get the resources to continue.

Source: SIP Consultors

As for the census in Spain, it may be lower, but the variation compared to the northern countries of the EU is not remarkable. It is not only the decline that we already know that there has been, but there are governments like the Dutch government that is encouraging (as it did in the late 90’s) the closure of farms, both cattle and pigs, following its objectives with the Europe 2030 Project.

To all this, we have to add the ASF in the EU, which Germany has been dealing with for almost two years and it seems that it is still not under control.

In addition, we have to add the decrease in exports. The EU has exported 475,000 tons less pork between January and April (Spain, about 150,000 tons less). And China no longer represents such a high percentage, a year ago Spain exported 79%, while now it is at 29%.

In conclusion of the photograph of the market situation is:

  • Mercolleida prices of historical record: 1,651€/Kg live
  • High raw material prices: Raw material index of 451,5€/tonne
  • Lower supply with adaptation of the industry to lower its costs
  • Very high inflation with a drop in pork consumption.
  • Although no longer in losses, need for more cash flow to be able to keep going
  • Less exports, but more diversification, lower exports to China

Mercedes Vega

General Director for Spain, Italy & Portugal at Genesus Genetics
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