0
Pig inventories from the different EU countries were published recently. In November 2023 there were 173,000 more sows in the EU than a year ago with 145,000 of them in Spain.
This figure alone indicates that the number of pigs available for slaughter in Spain will increase throughout 2024 compared to last year. Under identical sanitary conditions, it is expected that 3,500,000 more pigs will be slaughtered over twelve months. In other words, about 70,000 more head per week. This is without considering an improved sanitary situation compared to the last two years. This significant increase in the sow inventory in Spain is due to the confidence in the production sector.
We also learned not long ago that Tönnies (the largest slaughterhouse in Germany by far) has definitively abandoned its project for a new pig slaughtering and cutting plant in Calamocha (Teruel).
Both facts, although unconnected, point to a decrease in tensions in the live pig market: supply will ostensibly and inevitably increase and demand will not make the leap forward that it would have if a new large slaughterhouse were built.
To these certain and verifiable facts, we must add an intangible one: Spanish slaughterhouses' results from April to July last year were so catastrophic as to seriously influence decisions on how many pigs should be slaughtered weekly. This psychological factor invisibly hovers over our market. It is an invisible but very present factor.
Perhaps we are approaching a new situation with a greater balance between live supply and demand for slaughter. Perhaps it was time after a few years of much greater demand than supply. Perhaps we will return to what should be normal.
As far as the strict evolution of our price in Spain is concerned, we have noted that for the time being, the supposedly unstoppable race to the heights has slowed down both its pace and its cadence. Pork prices are sluggish and resisting, without going up decisively. Everything will slow down if pork prices do not react. We are in the middle of Holy Week, which traditionally marks the beginning of the summer season. The next few weeks will be key in the European market. We will see if the spring market (mainly barbecues in Germany) starts at Holy Week, as is tradition, or if it is delayed because these dates fall too early.
Let's look at what has happened in the Spanish market in the last two months: we started February with a price of 1.63 €/kg live (the bottom reached by Christmas) and right now, we are up to 1.80. In the same period, Germany started from the equivalent of 1.52 €/kg live (seven cents lower than the bottom reached there at Christmas) to now stand at the equivalent of 1.67. In Spain, the price went up seventeen cents and in Germany fifteen (eight if we compare year-end prices). As our readers know, Germany is the second-largest European producer and the former European Lead Market.
At present, the Spanish pig price is by far the most expensive among the EU member countries (except for the very special case of Italy, which is not very significant in terms of volume). Even Russia (which we mention in passing and anecdotally), whose production has grown by leaps and bounds, has the luxury of having its pigs half a euro per kilogram cheaper than ours. Russia slaughtered more than 44 million pigs in 2021, an increase of just 265% compared to twenty years ago...
With the difficulties of exporting to Asia due to the unbeatable competition with the Americans and the rest of our European partners (our intra-community competitors) in a price zone much more restrained than the one in Spain right now, it is hard to think that our price could climb much higher than it is now. As we pointed out in our previous commentary, we do not see it feasible to reach where we were a year ago. The average carcass weights are still at high levels, historic for this time of the year, and the Easter holidays will cause delays that will influence the weights and push them up.
In any case, Spanish pig production is in luck: feed prices are considerably lower than not long ago and pig farmers' accounts point to splendid results in 2024. It will probably be a year to remember, like some other not so long ago.
We will wait expectantly for what will happen after Easter. Some pieces (necks, loins) are expected to be expensive due to the slackness of the EU slaughtering. We will see if any price behaves explosively. Nothing can be ruled out a priori.
We will end with a lapidary phrase from Omar Khayyam (Persian philosopher and mathematician): "If you know that you can do nothing against your destiny, why does the uncertainty of tomorrow make you anxious? If you are not a fool, enjoy the present moment."
Guillem Burset
