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Things are not looking well. The price of pork falls and falls, and has been doing so for 8 consecutive sessions at Mercolleida (Spain), without a clue about where is the limit.
Europe is facing difficulties for selling its meat: Russia restricts its importations, and in the Asian markets it must compete with pig meat from the American continent, which is substantially cheaper.
On October 24th, the Spanish pork price fell only 0.003 euros. It seemed that the floor price was near. Germany was also experiencing 4 weeks of repetitions. The next day, the price in Germany dropped 5 cents, and after that it has fallen, decidedly, 7 cents more - Like a hit in the head with a mallet.
Since the record price in August, in Germany, which was coming from lower levels, the price has dropped 30 cents per kg of carcass, and in Spain the price has barely fallen 27 cents, and this would tell that the Spanish floor price is still far away.
Germay is, since years ago, the conducting market of all the European Union, and when Germany sneezes, the whole of Europe catches a cold. The communication vessels situation (due to the fluidity of the international trade) and the importance of Spanish exportations prevent Spain to have a price that is far away from the German price. It is like that. We have to accept it and learn to live with it.
Consumption is apathetic, the global European exportations to Russia (Spain has the Russian doors closed for all intents and purposes) are highly penalized in terms of volume, and there is not a good alternative. The Asian destinations make Europe beg, and their purchases are not enthusiastic,... None of the vectors that have an influence on the price point upwards, not even horizontally.
The abattoirs are having a really hard time for saving their operating statement. The price of pigs falls and the price of pork crashes. It is important to keep stocks at bay, and if this implies giving up the price of some cuts, it must be done.
The European Union, due to the WTO's liberalizing pressure, has just awarded to Canada a quota of 83,000 tonnes/year of pig meat free of tariffs. It is a negative piece of news in the medium term, another pinch in a situation that is already difficult.
We have no other thing to do than to wait, having faith in that the floor price will be reached as soon as possible. After the storm comes the calm.
Lao-Tzu (Chinese philosopher) said that “What the caterpillar calls the end, the rest of the world calls a butterfly.”
Guillem Burset
