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June: the producer's margin improves adequately

The low supply sets the pace of the price of pigs, but there are many more factors at stake: multiproduct commercial flow from Denmark to US; Russia has just presented a proposal for the opening of exports from some countries of the EU, etc.

The month of June ends with an accumulated rise of €0.085/kg of live pig in the market of Mercolleida (Spain), and the sensation is that the increase could have been higher. There is a lack of pigs week after week, and the carcass weight lowers week after week too. This is nothing new: the cycle repeats itself due to simple biological rules.

We are starting July with the price in the market of Mercolleida only €0.055 under the record of last year, and only €0.025€ under the record of the previous year. We will confirm, very soon, if the price can surpass one or both thresholds.

Catalonia still slaughters pigs from Brittany; Russia has presented, recently, a proposal for the opening of exports from some countries of the EU (Spain among them) that must have a quick answer from the European authorities; the prices in North America are climbing from already historically high prices; the abattoirs do not manage to transfer the rise in price to the cuts; important Spanish processors buy Danish meat at a very competitive price (Denmark suffers from the absence of the Russian market), etc. Many factors intervene in the equation and the variables are not being isolated.

The current shortage in terms of supply will go on for some weeks; the Spanish price will rise as much as it can without detaching fully from Germany, and maybe the last upward thrusts will come from overseas, with US and Canada buying in Europe, as it is starting to happen.

The coming together of the high prices of the livestock and the gradual and sustained decrease of food offers an unprecedented scenario due to its exceptional nature. We give for granted that in July nothing will change significantly. Never, as now, the farmer has wanted to preserve the statu quo or the situation as it is currently.

France is being left behind in the general revaluation of the European pig (and a proof of this are the live pigs imported from Brittany during all the month of June), although this exception cannot go on for long.

Generally speaking, we could say that the main factor that has pulled the price upwards has been the low supply of live pigs. There are no great joys of any kind in the European demand (if there has been any joy it has been very brief), and no incentives are expected.

The real 'new factor' in the global situation is, right now, the multiproduct commercial flow from Denmark to the US: it is very revealing and it could favour a strengthening of the European positions.

As a summary, the current situation will endure (surely, it will even improve) without problems in July, and when August arrives we will be able to evaluate better how the global market evolves. One step at a time.

We will end with a quote by Benjamin Franklin: "Happiness consists more in the small conveniences of pleasures that occur every day, than in great pieces of good fortune that happen but seldom to a man in the course of his life."

Guillem Burset

Guillem Burset

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