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February ended with a decidedly upward path for Spanish pig prices, as was the case last year. It has taken a month to absorb the delays from the Christmas holidays, unlike in 2023 when our market rose immediately after the beginning of the year. The first two Spanish price increases followed the German ones, the third with purely Spanish inertia, and yesterday's price increase was again driven by Germany.
The pace of the increases is proving to be brisk and steady. One could think that from now on the market will be a carbon copy of last year. We do not think so; we believe that this year we will not reach the €2.025/kg live at which Spain's price remained for four months last spring and summer. That price was possible thanks to (or rather, in spite of) the crippling losses of the slaughterhouses.
We believe that lessons have been learned and that rather than going into a tailspin, it would be better to slaughter less when there are no pigs. It is also quite possible that the selling side will limit its ambitions and be more cautious to avoid a possible boomerang effect.
The economy of finishing pigs in Spain right now is generous and abundant: feed has come down a few notches in price, carcass weights are at an all-time high, and slaughterhouses are showing interest in slaughtering: everything points to a more than favorable situation for Spanish pig farming in the year 2024.
Piglet prices continue at stratospheric levels, an unmistakable sign that in future months the live supply will be limited and pigs will tend to be in short supply rather than surplus. In other words, the outlook for production is unbeatable.
Everything indicates that slaughter in the EU this year will be, once again, lower than last year. With Spain as the exception, the other producing countries are in a reduction phase tending to stabilize their herds, with sow inventories decreasing or stabilized.
There have not been significant changes to the international context; although the United States pig price has reacted, it is still much lower than European prices, and the same can be said of Brazil and Canada. Europe is losing specific weight in exports to Asia (to the benefit of the aforementioned countries) and this circumstance is compensated by reducing the rate of self-sufficiency (and exports). China continues to swim in the abundance of its own production, resulting in decreased overall quantities imported.
This is the trend observed and contrasted in the last 12 months. Nothing new under the sun. The decrease of the European herd as a whole is a fact and is largely irreversible.
In Germany, the waters are troubled: the largest slaughter plant, which belonged to Vion, has definitively closed down and it remains to be seen what will happen to the rest of the plants. This is an unavoidable restructuring, forced and brought about by the bad economy and, above all, by the German pig herd having been reduced by over 20% in the last four years.
Looking at the panorama of what is happening in pig production in the EU, we can highlight the following:
- The EU is a bulwark for the swine market (which is not the case for other species such as chicken). There are heavy tariffs that make it difficult to import pork from third countries. This circumstance makes possible the notable price differences between European pigs and those of the rest of the world. The theory of communicating vessels with the rest of the world does not apply to our market, even though globalization is a current issue.
- Legal regulations surrounding community pig farming are increasingly burdensome and limiting: the changes needed on farms to comply with the animal welfare law, for example, are expensive and make the sector less competitive internationally.
- The maturity of the markets in the different EU countries translates into a rather noisy media presence of various aggressive actors against pork: vegans, vegetarians, animal activists, conservationists... Slowly changes are taking place in European public opinion, which is shifting towards positions of rejection and more and more intolerance towards our business.
The medium-term future seems clear: fewer pigs and fewer exports within the European Union. It is impossible to imagine any other scenario. All production actors must accept this fact, adapting to what is to come.
We believe that we cannot stand idly by in the face of smear campaigns (sometimes even defamatory) of our business. We must be able to highlight the enormous and unique positive synergies that pig farming brings with it.
Let us enjoy the present with an eye on the future. Let us fight so that the aphorism "feast today, famine tomorrow" does not come true.
As the great William Shakespeare said: "The cautious man never laments the present evil; he employs the present in preventing future afflictions."
Guillem Burset
