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During July Germany has made a strong challenge that is difficult to process for all Europe. The price of pigs dropped a total of €0.18/kg of carcass during the first three weeks, rectifying with +€0.03 on the following week and repeating the price the past week. For the whole of July the net loss has been €0.15/kg of carcass, which is equivalent to €0.115/kg LW.
In contrast, the Spanish market rose by €0.005 in the first week of July, and it then dropped by €0.047/kg LW. In total, the difference with the leader has increased by almost €0.07/kg LW.
Without dog days in the northern half of the Iberian peninsula, with an atypically low meat consumption (here and in faraway places), and with the aforementioned enormous price differences, the Spanish market has done more than enough resisting by dropping little by little. Resisting is winning, as the heading says.
The Russian embargo persists, and the whole of Europe suffers. The Russian absence is not being compensated with other markets, and the heaviness of the sales ballasts the price. No novelties are expected, and the explosive situation in North America (stratospheric record prices in Canada and US) is of no help: America is far away (a 5-week journey by ship), and there are very few establishments that are authorised and prepared to sell there.
Our price (Spain) will not be able to resist in its ivory tower: important German, Dutch and Danish operators are making easy profits by providing meat and different cuts to the Spanish industry in important amounts... and all this is contributing to the situatiuon being as a paradox: with an estimated self-sufficiency of 160% we are importing almost as never before. The situation is unsustainable: the Spanish and the German prices must converge. There is no other option. As we do not expect August to have an upward trend in Germany, the only option will be to lower the price of pigs south of the Pyrenees; probably without abrupt movements, but we must converge. Even Denmark (whose price frequently avoids the vicissitudes of its neighbour) has repositioned its price at a level that is quite lower than that of some weeks ago.
We are where we are and we are who we are. We will not reach last year's record, and not even the record of 2012, but this will not be an obstacle for 2014 being a good year for pig fatteners. The price of feed has dropped and this important factor is going to be comfortably covered until the end of the year.
The abattoirs look at the current situation with a dose of fatality: their margin has disappeared and they do not achieve as much a drop in the price of pigs as they need, they do not find buyers at the price that they should sell and 'they lose a sheet with each laundry'. With the aim of minimising the damages they go on slaughtering pigs the best they can hoping for the situation to improve.
As a traditional Chinese proverb says: 'The tree longs for the peace, but the wind will not give it to it.'
Guillem Burset
1 de agosto del 2014
