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We titled our previous commentary "Coronavirus pervades the pork market," unaware at the time how foreboding those words would be.
It must be highlighted, put in bold, and underlined, that during a time of complete crisis in the developed consumer society in which we live, a crisis that has spread to all the countries in our natural environment - especially Europe, the Spanish price was moving, undaunted, to absolute historical record levels until Thursday, March 19th.
Germany - this time with a clear vision of the global situation - lowered its price by 6 cents on Wednesday the 11th, another 7 cents on Wednesday the 18th, and finally again on Wednesday the 25th, seduced by the siren songs coming from China buying again in full force. Here we haven't been able to do anything but - as always - follow in the wake of the Germans reluctantly, begrudgingly, at the wrong time, and tailgaiting behind. At the moment these lines were written, the Spanish price was incomprehensibly well above all our European competitors, which is not normal. And even less so for this time of year.
We think that the intention here has been to try to live on the margins of the events that have shaken Europe; we find the replay of Thursday the 12th incomprehensible, just on the eve of complete alarm and two days before the confinement order. It's illogical for us to plan to live in an Ivory Tower, oblivious to reality. In short, the market will more than correct any deviation, and will do so abruptly. All in due time.
The remission of new COVID-19 infections in China has returned the ports to normal; unloading flows are back to normal and Chinese traders are showing great willingness to buy (and, in fact, contracts are already being formalized left and right). This in itself is excellent news.
It so happens that in our part of the world it seems the virus' peak of infection has not yet been reached; the spread of the pandemic is, in itself, a real sword of Damocles. Not to mention the doubts that various experts have expressed about the accuracy of the figures of those infected... In other words, the worst is yet to come.
Inevitably, the activity of slaughterhouses and processing plants will be slowed:
- Some of the workers (the most apprehensive) have abandoned their work and are not showing up at the companies. This phenomenon is growing.
- The new safety regulations (minimum distances between workers) force the personnel to "spread out", which reduces the effective processing capacity.
- Sooner or later, active personnel will be infected in processing plants and slaughterhouses (at this point, one cannot expect any miracles), which will further reduce operational capacity.
- The hotel, restaurant, and catering sector is disappearing, deserted. It isn't there nor is it expected, neither in Spain nor in Europe. All orders have been cancelled and no new ones are being created for this sector.
- There has been a gradual reduction in activity throughout the EU; many charcuterie factories are at half-mast and our export activity to all European destinations is decreasing with every passing week.
In this context, a profound and rapid price correction seems unavoidable, which won't be painful due to the fact that we are moving in the stratosphere. We will be clinging to China as our last hope, but the problem lies in the challenge of slaughtering and processing the usual number of pigs. Difficulties in the slaughterhouses will force pigs to be left on the farms on standby; the 3 kilos of extra carcass weight on average that are held back week after week will weigh heavily and cause the drop to be sudden. Doubts, uncertainty, mistrust, wariness (fear?) have many faces.
In Spain we are sacrificing and processing around 1,000,000 head every week; this is like a giant, well-oiled engine that needs everything to work perfectly. Any minor problem turns into a grain of sand that alters the operation of this giant precision machine. COVID-19 is more than an inconvenience or a grain of sand... And its consequences will be tangibly very serious, both in our sector and in the economy in general. Let's not forget that the supply of pork to consumers is considered an essential service. Thankfully.
In Catalonia we learned today that the fishing fleet will be totally moored starting Monday, the 30th. And fishing is also essential. Perhaps we should take note of their situation so we can be on guard.
In our opinion, those who truly deserve medals are the slaughterhouse workers (and by extension the slaughterhouses themselves), who with their selflessness and disciplined attendance at their workplace ensure that the Spanish pig sector does not collapse. These are the true heroes (not forgetting other true heroes, healthcare professionals). I think it is only right that we thank them for their sacrifice.
Let us hope and wish that pig feed supply channels remain open, that operations in slaughterhouses continue to run, and that scientists will quickly find an effective vaccine against COVID-19. The vaccine seems to us, we say in all humility, the only solution.
Arthur Schnitzler (Austrian neurologist, playwright, and novelist) said: “To be ready is one thing, to be able to wait is another; but to seize the right moment is everything.”
Guillem Burset
